Question 25

Reference: 10-03

The Albright Company uses standard costing and has established the following standards for its single product:

Direct Materials 2 litres at $3 per litre

Direct Labour 0.5 hours at $8 per hour

Variable Manufacturing Overhead 0.5 hours at $2 per hour

During November, the company made 4,000 units and incurred the following costs:

Direct Materials Purchased 8,100 litres at $3.10 per litre

Direct Materials Used 7,600 litres

Direct Labour Used 2,200 hours at $8.25 per hour

Actual Variable Manufacturing Overhead $4,175

The company applies variable manufacturing overhead to products on the basis of direct labour hours.

What was the labour rate variance for November?

Question 25 options:

A)

$1,050 unfavourable.

B)

$2,150 unfavourable.

C)

$2,150 favourable.

D)

$550 unfavourable.