The following data is given for the Harry Company: Budgeted production 26,000 un

Question

The following data is given for the Harry Company: 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 Overhead is applied on standard labor hours. The direct labor rate variance is: Select one: a. 6,000U b. 6,000F c. 33,000F d. 33,000U

Explanation / Answer

Answer is b. $ 6000 fav Explanation: Std Hourly rate: $ 22 per hour Actual output: 27500 units Std labour hours for actual ouotput (27500*6.6): 181500 hours Actual Labour hourrs: 183000 hours Actual labour rate per hour (4020000/183000): 21.9672 Labour rate variance: Actual labour hours (Std rate per hour- Actual labour rate per hour) 183000 hours (22.00 -21.9672) = $ 6000 fav

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