Tharaldson Corporation makes a product with the following standard costs:
The company reported the following results concerning this product in June.
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 June is:
A) $616 F
B) $616 U
C) $550 F
D) $550 U

Question

Tharaldson Corporation makes a product with the following standard costs:
  The company reported the following results concerning this product in June.
  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 June is:
A) $616 F 
B) $616 U 
C) $550 F 
D) $550 U

Quizplus · Accepted Answer

AH × AR = $12,050
Labor rate variance = (AH × AR) − (AH × SR)
= ($12,050) − (500 hours × $23.00 per hour)
= $12,050 − $11,500
= $550 U

Tharaldson Corporation Makes a Product with the Following Standard Costs