Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall

Exercise 29

For the following questions, circle the best response.

Use the following data for Questions 3 through 6.

Precision Inc.’s standard cost per unit, based on a budgeted level of production of 400 units, is as follows:

Raw materials (200 pounds @ 30 cents per pound)	$60.00
Direct labor (3 hours @ $15.00 per hour)	45.00

The actual results for the 380 units produced were as follows:

Raw materials cost for 76,300 pounds used	$25,942
Direct labor cost for 1,200 hours worked	16,200

Labor rate variance is

a. $1,200 U.

b. $1,800 U.

c. $1,200 F.

d. $1,800 F.