Tharaldson Corporation makes a product with the following standard costs: The co

Question

Tharaldson 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:

Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 6.6 ounces $ 3.00 per ounce $ 19.80 Direct labor 0.3 hours $ 10.00 per hour $ 3.00 Variable overhead 0.3 hours $ 5.00 per hour $ 1.50

Explanation / Answer

Direct Labor Rate Variance = (Standard Rate - Actual Rate) x Actual Hours                                                        = [10 - 23.53] x 510                                                              = 6900 Unfav

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