Milar Corporation makes a product with the following standard costs: 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:

1 answer
Question:

Milar Corporation makes a product with the following standard costs: 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:

Answers

Answer: -$3,547 unfavorable Explanation: For the computation of labor rate variance for January first we need to find out the standard direct labor cost which is shown below:- Standard Direct labor cost = Produced units × Standard quantity of direct labor × Standard price of direct labor = 3,440 × 0.8 × $33 = $90,816 Labor rate Variance = Standard direct labor cost - Actual labor cost = $90,816 - $94,363 = -$3,547 unfavorable Therefore for computing the labor rate variance we simply applied the above formula.

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