The following data is given for the Harry Company: Budgeted production 1,092 uni

Question

The following data is given for the Harry Company:
Budgeted production   1,092 units
Actual production      971 units
Materials:  
    Standard price per ounce   $1.8
    Standard ounces per completed unit   10
     Actual ounces purchased and used in production   9,419
    Actual cost of materials   $19,309
Labor:  
    Standard hourly labor rate   $15.00 per hour
    Standard hours allowed per completed unit   4.0
     Actual labor hours worked   5,001
    Actual total labor costs   $76,265
Overhead:  
    Actual and budgeted fixed overhead   $1,056,249
    Standard variable overhead rate   $26.00 per standard labor hour
     Actual variable overhead costs   $140,028
Overhead is applied on standard labor hours.
Determine the direct labor rate variance.
Select the correct answer.
    $16,755 F  
   $1,250 U  
   $16,755 U  
   $18,005 U  

Explanation / Answer

$5001 × (($76265/5001) – $15.0)

$5001 × (($15.24995) – $15.0)

= $5001 × $0.15

=1250 Unfavorable

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