Ortman Corporation makes a product wth the following standard costs or Standard

Question

Ortman Corporation makes a product wth the following standard costs or Standard Price or Rate Direct materials Direct labor Variable overhead 6.8 liters 12 hours 12 hours $13.00 per liter $18.00 per hour $3.00 per hour The company reported the following results concerning this product in May Actual output Raw materials used in production Actual direct labor-hours Purchases of raw meterials Actual price of row materials purchesed Actual direct lebor rate Actual variable overhead rate 1,800 units 12,060 liters 2.085 hours 13,590 liters $ 700 per liter $17.30 per hour $2.60 per hour The compary applies variable overhead on the basis of direct labor-hours. The direct materials purchases veriance is computed wWhen the materials are purchased The labor rate vartance for May Is O $1487F O $1460 U O $1460 F o $1,487

Explanation / Answer

Labour rate variance = (actual hours * actual rate) - (actual hours * standard rate)

= (2085 * 17.3) - (2085 * 18)

= $1,460 F

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