23. Jackson Industries uses a standard cost system in which direct materials inv

Question

23. Jackson Industries uses a standard cost system in which direct materials inventory is carried at standard cost. Jackson has established the following standards for one unit of product:

During May, Jackson purchased 107,250 pounds of direct material at a total cost of $525,525. The total factory wages for May were $465,100, 90 percent of which were for direct labor. Jackson manufactured 23,000 units of product during May using 88,600 pounds of direct material and 60,300 direct labor-hours.

The labor rate variance for May is:

A. $3,510 Favorable

B. $2,310 Unfavorable

C. $3,510 Unfavorable

D. $1,110 Favorable

Standard Quantity Standard Price or Rate Standard Cost Direct materials 4 pounds $4.70 per pound $18.80 Direct labor 2.60 hours $7.00 per hour $18.20

Explanation / Answer

Labor rate variance for May = (465100*90%)-(60300*7)= 3510 Favorable Option A is correct

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