Biery Corporation makes a product with the following standard costs: The company produced 4,100 units in April using 5,380 liters of direct material and 2,610 direct labor-hours. During the month, the company purchased 6,000 liters of the direct material at $5.80 per liter. The actual direct labor rate was $19.80 per hour and the actual variable overhead rate was $2.90 per hour. 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 April is:
A)$1,968 F
B)$2,088 F
C)$2,088 U
D)$1,968 U

Question

Biery Corporation makes a product with the following standard costs:  The company produced 4,100 units in April using 5,380 liters of direct material and 2,610 direct labor-hours. During the month, the company purchased 6,000 liters of the direct material at $5.80 per liter. The actual direct labor rate was $19.80 per hour and the actual variable overhead rate was $2.90 per hour. 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 April is:
A)$1,968 F 
B)$2,088 F 
C)$2,088 U 
D)$1,968 U

Quizplus · Accepted Answer

Actual hours worked = 2,610
Actual rate per hour = $19.80
Standard rate per hour = $20.00
Therefore, the labor rate variance = (Actual hours worked x (Actual rate per hour - Standard rate per hour)) = (2,610 x ($19.80 - $20.00)) = $2,088 U.

Biery Corporation Makes a Product with the Following Standard Costs