Uses standard costing-labor rate variance

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The Collins Corporation uses standard costing and has established the following direct material and direct labor standards for each unit of the single product it makes:

Direct materials: 4 gallons at $8 per gallon

Direct labor: 1 hour at $16 per hour

During July, the company made 6,000 units of product and incurred the following costs:

Direct materials purchased: 26,800 gallons at $8.20 per gallon

Direct materials used: 25,200 gallons

Direct labor used: 5,600 hours at $15.30 per hour

The direct materials purchases variance is computed when the materials are purchased.

The labor rate variance for July was:

A $3,920 Unfavorable

B $1,120 Favorable

C $6,120 Unfavorable

D $3,920 Favorable

Reference no: EM13790297

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