Assume that the standard cost to make one finished unit includes 2 hour of direc

Question

Assume that the standard cost to make one finished unit includes 2 hour of direct labor at $8 per hour. During April, 22,000 direct labor-hours were worked, 10,500 units of product were manufactured, and total direct labor cost was $160,000.

  What is the labor rate variance for April?

$ 2,000 (U)

$ 2,000 (F)

$16,000 (U)

$16,000 (F)

Which term describes difference between the actual price of materials and the standard price?

Price variance

Standard cost variance

Inflation index adjustment

Materials price index

Information for Tube division is as follows:

Net earnings for division

$40,000

Assets in the division

$100,000

Required of return

16%

What is Tube’s residual income?

$26,000

$24,000

$32,000

$95,200

$ 2,000 (U)

$ 2,000 (F)

$16,000 (U)

$16,000 (F)

Explanation / Answer

Standard cost variance:

Direct Labor Rate Variance: AHxAR(actual cost) - AH*SR 160000-22000*8 16000 F

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