Cox Engineering performs cement core tests in its laboratory. The following standards have been set for each core test performed: During March, the laboratory performed 2,000 core tests. On March 1 no direct materials (sand) were on hand. Variable manufacturing overhead is assigned to core tests on the basis of standard direct labor-hours. The following events occurred during March:

• 8,600 pounds of sand were purchased at a cost of $7,310.
• 7,200 pounds of sand were used for core tests.
• 840 actual direct labor-hours were worked at a cost of $8,610.
• Actual variable manufacturing overhead incurred was $3,200.
-The labor rate variance for March is:
A)$4,578 unfavorable
B)$1,470 unfavorable
C)$4,578 favorable
D)$1,470 favorable

Question

Cox Engineering performs cement core tests in its laboratory. The following standards have been set for each core test performed:  During March, the laboratory performed 2,000 core tests. On March 1 no direct materials (sand) were on hand. Variable manufacturing overhead is assigned to core tests on the basis of standard direct labor-hours. The following events occurred during March:

• 8,600 pounds of sand were purchased at a cost of $7,310.
• 7,200 pounds of sand were used for core tests.
• 840 actual direct labor-hours were worked at a cost of $8,610.
• Actual variable manufacturing overhead incurred was $3,200.
-The labor rate variance for March is:
A)$4,578 unfavorable 
B)$1,470 unfavorable 
C)$4,578 favorable 
D)$1,470 favorable

Quizplus · Accepted Answer

Labor rate variance = AH (AR - SR)= AH F1F1F1S1F1F1F10 AR - AH F1F1F1S1F1F1F10 SR
= $8,610 - (840 hours F1F1F1S1F1F1F10 $12 per hour)
= $8,610 - $10,080 = $1,470 F

Cox Engineering Performs Cement Core Tests in Its Laboratory