Majer Corporation makes a product with the following standard costs: The company reported the following results concerning this product in February.
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 February is:
A) $1,146 U
B) $1,176 U
C) $1,176 F
D) $1,146 F

Question

Majer Corporation makes a product with the following standard costs:  The company reported the following results concerning this product in February.
 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 February is:
A) $1,146 U 
B) $1,176 U 
C) $1,176 F 
D) $1,146 F

Quizplus · Accepted Answer

Labor rate variance = AH × (AR − SR)
= 1,910 hours × ($12.40 per hour − $13.00 per hour)
= 1,910 hours × (−$0.60 per hour)
= $1,146 F

Majer Corporation Makes a Product with the Following Standard Costs