Handerson Corporation makes a product with the following standard costs: The company reported the following results concerning this product in August.
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 August is:
A) $464 F
B) $512 U
C) $464 U
D) $512 F

Question

Handerson Corporation makes a product with the following standard costs:  The company reported the following results concerning this product in August.
 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 August is:
A) $464 F 
B) $512 U 
C) $464 U 
D) $512 F

Quizplus · Accepted Answer

Labor rate variance = (AH × AR) − (AH × SR)
= ($22,736) − (1,160 hours × $20.00 per hour)
= $22,736 − $23,200
= $464 F

Handerson Corporation Makes a Product with the Following Standard Costs