Gilder Corporation makes a product with the following standard costs: The compan
ID: 2472979 • Letter: G
Question
Gilder Corporation makes a product with the following standard costs:
The company reported the following results concerning this product in June.
The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.
The labor rate variance for June is:
Hours Standard Price or
Rate Standard Cost Per
Unit Direct materials 7.6 grams $6.00 per gram $45.60 Direct labor 0.1 hours $16.00 per hour $1.60 Variable overhead 0.1 hours $6.00 per hour $0.60
Explanation / Answer
SRSH SRAH ARAH
16 x 550 16 x 510 $ 7,803
= $ 8,800 = $ 8,160
SR = Standard rate per labor hour
SH= Standard hours required for actual production
= 0.1 x 5,550 = 550 hours
AH = Actual hours worked = 510 hours
ARAH = Actual labor cost = $ 7803
AR =Actual rate = ARAH/AH = $ 7,803/510 = $ 15.3
Labor rate variance = SRAH –ARAH = $ 8,160 – $ 7,803
= $ 357
The labor rate variance for June is: $ 357
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