Assume the following information appears in the standard cost card for a company that makes only one product: Standar Quantity or Hours Standar Price or Rate Standard CostDirect materials5pounds$ 11.00per pound$ 55.00Direct labor2hours$ 16.90per hour$ 33.80Variable manufacturing overhead2hours$ 3.00per hour$ 6.00During the most recent period, the following additional information was available:20,000 pounds of material was purchased at a cost of $10.50 per pound.All of the material that was purchased was used to produce 3,900 units.8,000 direct labor-hours were recorded at a total cost of $132,000.What is the direct labor rate variance?

The direct labor rate variance measures the difference between the actual hourly wage paid to…

Answered: Assume the following information…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter2: Basic Cost Management Concepts

Section: Chapter Questions

Problem 21E: Ellerson Company provided the following information for the last calendar year: During the year,...

See similar textbooks

Related questions

Concept explainers

Question

Assume the following information appears in the standard cost card for a company that makes only one product:

	Standar Quantity or Hours		Standar Price or Rate		Standard Cost
Direct materials	5	pounds	$ 11.00	per pound	$ 55.00
Direct labor	2	hours	$ 16.90	per hour	$ 33.80
Variable manufacturing overhead	2	hours	$ 3.00	per hour	$ 6.00

During the most recent period, the following additional information was available:

20,000 pounds of material was purchased at a cost of $10.50 per pound.
All of the material that was purchased was used to produce 3,900 units.
8,000 direct labor-hours were recorded at a total cost of $132,000.

What is the direct labor rate variance?

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

Expert Solution

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.