Question

Eliezrie Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 6.5 kilos $1.00 per kilo $6.50 Direct labor 0.3 hours $10.00 per hour $3.00 Variable overhead 0.3 hours $4.00 per hour $1.20 In January the company's budgeted production was 7,400 units but the actual production was 7,500 units. The company used 45,580 kilos of the direct material and 2,030 direct labor-hours to produce this output. During the month, the company purchased 48,500 kilos of the direct material at a cost of $53,350. The actual direct labor cost was $18,473 and the actual variable overhead cost was $7,714. 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 January is:

Answer 1

Direct labor rate variance= $1,827

Step-by-step explanation:

Giving the following information:

Standard costs:

Direct labor 0.3 hours, $10.00 per hour.

In January the company's budgeted production was 7,400 units but the actual production was 7,500 units.

The company used 2,030 direct labor-hours for $18,473.

Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity

Direct labor rate variance= (10 - 9.1)*2,030= $1,827