Carlton Corporation
Carlton Corporation produces and sells faux-leather handbags. In the current year, the company budgeted for the production and sale of 1000 handbags; however, 900 handbags were actually produced and sold. Each bag has a standard requiring 2 metres of material at a cost of $4.00 per metre and 1 hour of assembly time at a cost of $9.50 per hour. Actual costs for the production of 900 bags were $7215 for materials (1850 metres purchased and used @ $3.90 per metre) and $10 125 for labour (1125 hours @ $9.00 per hour).
-Carlton's direct labour rate variance is:
A) $562.50 F
B) $562.50 U
C) $450.00 F
D) $450.00 U

Question

Quizplus · Accepted Answer

The direct labour rate variance is calculated as (Actual Hourly Rate - Standard Hourly Rate) x Actual Hours Worked. The standard hourly rate is $9.50, the actual hourly rate is $9.00, and the actual hours worked are 1125. Therefore, the variance is ($9.00 - $9.50) x 1125 = -$562.50, which is favorable (F) because the actual cost is less than the standard cost.

Carlton Corporation Carlton Corporation Produces and Sells Faux-Leather Handbags. in the Current