The company reported the following results concerning this product in April. The

Question

The company reported the following results concerning this product in April.

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:

Actual output. Raw materials used in production Purchases of raw materials Actual direct labor-hours. Actual cost of raw materials purchases. Actual direct labor cost Actual variable overhead cost 8,800 units 78,150 pounds 85,900 pounds 2,560 hours $240,520 $39,424 $6,912

Explanation / Answer

since standard rate is more than that of actual rate, so labor rate variance is favorable

calculation of labor rate variance: formula=actual hours(standard rate-actual rate) 2560 hours($17-(39424/2560hours)=2560(17-15.4)=4096 F

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