The following data is given for the Harry Company: Overhead is applied on standa

Question

The following data is given for the Harry Company:

Overhead is applied on standard labor hours. (Round interim calculations to the nearest cent.)

The direct labor rate variance is

A)$33,000 favorable

B)$33,000 unfavorable

C)$5,490 unfavorable

D)$5,490 favorable

Budgeted production 26,000 units Actual production 27,500 units Materials:   Standard price per ounce $6.50   Standard ounces per completed unit 8   Actual ounces purchased and used in production 228,000   Actual price paid for materials $1,504,800 Labor:   Standard hourly labor rate $22 per hour   Standard hours allowed per completed unit 6.6   Actual labor hours worked 183,000   Actual total labor costs $4,020,000 Overhead:   Actual and budgeted fixed overhead $1,029,600   Standard variable overhead rate $24.50 per standard labor hour   Actual variable overhead costs $4,520,000

Explanation / Answer

Ans) d)5490 Favorable

Labour Rate Variance (SR-AR)AH SH 27500*6.6 181500 Hours AH 183000 Hours AR 4020000/183000 21.97 Per Hour SH 22 Per Hour (22-21.97)*183000 0.03 Labour Rate Variance 5490 favorable

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