Arrow Industries uses a standard cost system in which direct materials inventory is carried at standard cost. Arrow has established the following standards for the prime costs of one unit of product. During May, Arrow purchased 160,000 pounds of direct material at a total cost of $304,000. The total direct labor wages for May were $37,800. Arrow manufactured 19,000 units of product during May using 142,500 pounds of direct material and 5,000 direct labor-hours.
-The direct labor rate variance for May is:
A)$2,200 favorable
B)$1,900 unfavorable
C)$2,000 unfavorable
D)$2,090 favorable

Question

Arrow Industries uses a standard cost system in which direct materials inventory is carried at standard cost. Arrow has established the following standards for the prime costs of one unit of product.  During May, Arrow purchased 160,000 pounds of direct material at a total cost of $304,000. The total direct labor wages for May were $37,800. Arrow manufactured 19,000 units of product during May using 142,500 pounds of direct material and 5,000 direct labor-hours.
-The direct labor rate variance for May is:
A)$2,200 favorable 
B)$1,900 unfavorable 
C)$2,000 unfavorable 
D)$2,090 favorable

Quizplus · Accepted Answer

Labor rate variance = (AQ F1F1F1S1F1F1F10 AP)- (AQ F1F1F1S1F1F1F10 SP)
= $37,800 - (5,000 hours F1F1F1S1F1F1F10 $8.00 per hour)
= $37,800 - $40,000 = $2,200 F

Arrow Industries Uses a Standard Cost System in Which Direct