Caquias Corporation makes a product with the following standard costs: The company reported the following results concerning this product in August. 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 August is:
A)$440 F
B)$440 U
C)$420 U
D)$420 F

Question

Caquias Corporation makes a product with the following standard costs:  The company reported the following results concerning this product in August.  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 August is:
A)$440 F 
B)$440 U 
C)$420 U 
D)$420 F

Quizplus · Accepted Answer

Labor rate variance = (AH F1F1F1S1F1F1F10 AR)- (AH F1F1F1S1F1F1F10 SR)
= $10,560 - (1,100 hours F1F1F1S1F1F1F10 $10.00 per hour)
= $10,560 - $11,000 = $440 F

Caquias Corporation Makes a Product with the Following Standard Costs