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Tharaldson Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 7.0

Tharaldson Corporation makes a product with the following standard costs:

Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit
Direct materials 7.0 ounces $ 3.00 per ounce $ 21.00
Direct labor 0.3 hours $ 14.00 per hour $ 4.20
Variable overhead 0.3 hours $ 9.00 per hour $ 2.70

The company reported the following results concerning this product in June.

Originally budgeted output 2,400 units
Actual output 2,900 units
Raw materials used in production 22,000 ounces
Purchases of raw materials 23,100 ounces
Actual direct labor-hours 550 hours
Actual cost of raw materials purchases $ 45,000
Actual direct labor cost $ 12,400
Actual variable overhead cost $ 3,200

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:

Multiple Choice

  • $177 F

  • $4,700 F

  • $177 U

  • $4,700 U

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