Ortman Corporation makes a product with the following standard costs: The company reported the following results concerning this product in May. 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 May is:

Question

Ortman Corporation makes a product with the following standard costs:  The company reported the following results concerning this product in May.  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 May is:

Quizplus · Accepted Answer

Labor rate variance = AH × (AR − SR)
= 1,090 hours × ($16.10 per hour − $17.00 per hour)
= 1,090 hours × (−$0.90 per hour)
= $981 F

Ortman Corporation Makes a Product with the Following Standard Costs