Bulluck Corporation makes a product with the following standard costs:
The company reported the following results concerning this product in July.
The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.
-The labor rate variance for July is:
A) $764 F
B) $764 U
C) $840 U
D) $840 F

Question

Bulluck Corporation makes a product with the following standard costs:
  The company reported the following results concerning this product in July.
  The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.
-The labor rate variance for July is:
A) $764 F 
B) $764 U 
C) $840 U 
D) $840 F

Quizplus · Accepted Answer

Labor rate variance = AH × (AR − SR)
= 1,910 hours × ($11.40 per hour − $11.00 per hour)
= 1,910 hours × ($0.40 per hour)
= $764 U

Bulluck Corporation Makes a Product with the Following Standard Costs