Milar Corporation makes a product with the following standard costs:
| Standard Quantity or Hours | Standard Price or Rate | ||||||||||
| Direct materials | 7.7 | pounds | $ | 4.00 | per pound | ||||||
| Direct labor | 0.1 | hours | $ | 20.00 | per hour | ||||||
| Variable overhead | 0.1 | hours | $ | 4.00 | per hour | ||||||
In January the company produced 2,000 units using 16,060 pounds of the direct material and 210 direct labor-hours. During the month, the company purchased 16,900 pounds of the direct material at a cost of $65,910. The actual direct labor cost was $4,473 and the actual variable overhead cost was $756.
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 January is:
Answer
--Requirement: Labor Rate variance
| Labor Rate Variance | ||||||
| ( | Standard Rate | - | Actual Rate = $4473 /210 hrs | ) | x | Actual Labor Hours |
| ( | $ 20.00 | - | $ 21.30 | ) | x | 210 |
| -273 | ||||||
| Variance | $ 273.00 | Unfavourable-U | ||||
Milar Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price...