A product's standard cost card specifies that a unit of the product requires 4 direct labor-hours. During September, 3,350 units were made, which was 150 units less than budgeted. The total budgeted direct labor cost for September was $117,600. The direct labor cost incurred during September was $111,850 and 13,450 direct labor-hours were worked. The labor rate variance for the month was:
A) $5,750 F
B) $5,750 U
C) $1,130 F
D) $1,130 U

Question

Quizplus · Accepted Answer

SR = $117,600 ÷ [(3,350 units + 150 units) × 4 hours per unit]
SR = $117,600 ÷ [(3,500 units) × 4 hours per unit]
SR = $117,600 ÷ [14,000 hours]
SR = $8.40 per hour
AH × AR = $111,850
Labor rate variance = (AH × AR) − (AH × SR)
= ($111,850) − (13,450 hours × $8.40 per hour)
= $111,850 − $112,980
= $1,130 F

A Product's Standard Cost Card Specifies That a Unit of the Product