Gilder Corporation makes a product with the following standard costs: Standard Q

Question

Gilder Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 9.20 grams $8.00 per gram $73.60 Direct labor 0.1 hours $16.00 per hour $1.60 Variable overhead 0.1 hours $8.00 per hour $0.80 The company reported the following results concerning this product in June. Originally budgeted output 7,300 units Actual output 7,400 units Raw materials used in production 40,800 grams Purchases of raw materials 47,300 grams Actual direct labor-hours 650 hours Actual cost of raw materials purchases $262,590 Actual direct labor cost $8,203 Actual variable overhead cost $3,170 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 June is: $2,213 F $2,197 F $2,213 U $2,197 U

Explanation / Answer

Solution:

The answer to the above question is -

$ 2,197 F

Direct labor rate variance = ( Standard rate per hour - Actual rate per hour ) * Actual hours Standard rate per hour 16 Actual rate per hour - $ 8,203 /650 hours 12.62 Actual hours 650 Direct labor rate variance 2,197

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