Hurren 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)$4,095 F
B)$4,050 F
C)$4,095 U
D)$4,050 U

Question

Hurren 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)$4,095 F 
B)$4,050 F 
C)$4,095 U 
D)$4,050 U

Quizplus · Accepted Answer

Labor rate variance = AH(AR - SR)
= 4,500 hours ($19.90 per hour - $19.00 per hour)
= 4,500 hours ($0.90 per hour)= $4,050 U

Hurren Corporation Makes a Product with the Following Standard Costs