4. Tractor Corporation produces toy tractors. What is the rate variance of the direct materials?

The company uses the following direct cost categories:

Category

Standard Inputs

for 1 output

Std. Cost

per input

Direct Materials

4.00

$12.50

Direct Labour

1.40

9.50

Direct Marketing

0.54

5.50

Actual performance for the company is shown below:

Actual output: 5,000 units

Direct Materials:

Materials costs

$299,000

Input purchased and used

23,000

Actual price per input

$13.00

Direct Manufacturing Labour:

Labour costs

$95,000

Labour-hours of input

9,500

Actual price per hour

$10.00

Direct Marketing Labour:

Labour costs

$40,000

Labour-hours of input

5,000

Actual price per hour

$8.00

Select one:

a. $11,500 unfavourable

b. $11,000 favourable

c. $10,000 favourable

d. $11,500 favourable