M accounting(new) |mois M1 mail G Google moodle Hurren Corporation makes a produ
ID: 2586885 • Letter: M
Question
M accounting(new) |mois M1 mail G Google moodle Hurren Corporation makes a product with the following standard costs: Per Unit Hours 10.10 grams 0.2 hours 0.2 hours Rate Direct materials Direct labor $18.00 per hour $5.00 per hour $50.50 $3.60 $1.00 The company reported the following results concerning this product in June. Originally budgeted output Actual output Raw materials used in production Purchases of raw materials Actual direct labor-hours Actual cost of raw materials purchases $263,940 Actual direct labor cost Actual variable overhead cost 8,800 units 8,900 units 41700 grams 49.10 grams 740 hours $8,428 $3,404 The compeny 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: O $4,910 F O $4,892 F O $4910 U O $4.892 U ReferencesExplanation / Answer
Labour rate variance= AH(AR-SR)
where,
AH=Actual hours
AR=Actual rate
SR=standard rate
Hence,
actual hours=actual direct labour hours=740
actual rate=actual direct labour cost/actual direct labour hours
=8428/740
=11.39$ per hour
Standard rate=direct labour standard rate=$18per hour
thus,
Labour rate variance= AH(AR-SR)
=740(11.39-18)
=$4892 F
Since actual rate is less than standard rate, it is favourable.
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