A company uses the following standard costs to produce a single unit of output.

Question

A company uses the following standard costs to produce a single unit of output. Direct materials 7 pounds at $1.00 per pound = $ 7.00 Direct labor 0.30 hour at $10.00 per hour = $ 3.00 Manufacturing overhead 0.30 hour at $3.10 per hour = $ 0.93 During the latest month, the company purchased and used 66,000 pounds of direct materials at a price of $1.1 per pound to produce 10,000 units of output. Direct labor costs for the month totaled $27,451 based on 2,830 direct labor hours worked. Variable manufacturing overhead costs incurred totaled $6,300 and fixed manufacturing overhead incurred was $20,000. Based on this information, the direct labor rate variance for the month was:

Multiple Choice

$849 favorable

$2,549 unfavorable

$1,700 unfavorable

$1,700 favorable

$2,549 favorable

Explanation / Answer

Direct labour rate variance = (Standard rate-actual rate)actual hours

= (10*2830-27451)

Direct labour rate variance = 849 Favorable

so answer is a) $849 Favorable

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