#9

Grub Chemical Corporation has developed cost standards for the production of its new cologne, ChocO. The variable cost standards below relate to each 10 gallon batch of ChocO:

	Standard Cost Per Batch
Milk cologne (2 pounds $0.85 per pound)	$	1.70
Direct labor (1.25 hours $12.00 per hour)	$	15.00
Variable overhead (1.25 hours $44.00 per hour)	$	55.00

Variable manufacturing overhead at Grub is applied based on direct labor-hours. The actual results for last month were as follows:

Number of batches produced		3,800
Direct labor-hours incurred		4,510
Pounds of cologne purchased		9,000
Pounds of cologne used in production		7,880
Cost of cologne purchased	$	7,200
Direct labor cost	$	53,218
Variable manufacturing overhead cost	$	205,700

What is ChocO's labor rate variance?

Garrison 16e Rechecks 2017-07-22

Garrison 16e Rechecks 2018-06-07

Multiple Choice

$2,880 Favorable

$3,782 Favorable

$902 Favorable

$14,432 Favorable