Karo Corporation has provided the following data concerning its direct labor costs for December:
-The Labor Rate Variance for December would be recorded as a:
A)Credit of $9,086
B)Debit of $9,086
C)Credit of $8,428
D)Debit of $8,428

Question

Karo Corporation has provided the following data concerning its direct labor costs for December: 
-The Labor Rate Variance for December would be recorded as a:
A)Credit of $9,086 
B)Debit of $9,086 
C)Credit of $8,428 
D)Debit of $8,428

Quizplus · Accepted Answer

Labor Rate Variance measures the difference between the actual and budgeted labor rate per hour. As the actual rate is higher than the budgeted rate, the company would have incurred more labor costs than expected. Therefore, the Labor Rate Variance would have an unfavorable impact on the profitability of the company. To account for this, we will record the Labor Rate Variance as a Debit of $9,086, which will increase the labor cost for the month, reducing the net income.

Karo Corporation Has Provided the Following Data Concerning Its Direct