Milar Corporation makes a product with the following standard costs:

	Standard Quantity or Hours			Standard Price or Rate
Direct materials		7.0	pounds	$	6.50	per pound
Direct labor		0.8	hours	$	26.00	per hour
Variable overhead		0.8	hours	$	12.00	per hour

In January the company produced 3,370 units using 13,480 pounds of the direct material and 2,816 direct labor-hours. During the month, the company purchased 14,240 pounds of the direct material at a cost of $35,100. The actual direct labor cost was $72,810 and the actual variable overhead cost was $32,380.

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 January is:

Multiple Choice

• $406 F

• $406 U

• $2,714 U

• $2,714 F