Solly Corporation produces a product for national distribution. Standards for the product are: Materials: 12 ounces per unit at 60¢ per ounce.
Labor: 2 hours per unit at $8 per hour.
During the month of December, the company produced 1,000 units. Information for the month follows:
Materials: 14,000 ounces purchased and used at a total cost of $7,700.
Labor: 2,500 hours worked at a total cost of $20,625.
The labor rate variance is:

Question

Quizplus · Accepted Answer

AH × AR = $20,625
Labor rate variance = (AH × AR) − (AH × SR)
= ($20,625) − (2,500 hours × $8.00 per hour)
= $20,625 − $20,000
= $625 U

Solly Corporation Produces a Product for National Distribution