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Kooks Corporation uses a standard cost system
Kooks Corporation uses a standard cost system. The direct labor standards for the company's only product specify 0.90 hours per unit at $21.50 per hour. During the year, the company started and completed 26,800 units. Direct labor employees worked 25,220 hours at an average cost of $22.50 per hour. Based on the foregoing, which is correct?
a. ($25,220) in the Labor Rate Variance column
b. $25,220 in the Labor Rate Variance column
c. $25,220 in the Labor Efficiency Variance column
d. ($25,220) in the Labor Efficiency Variance column
Expert Solution
Solution:-
(Actual rate - Standard rate) x Actual hours worked = Labor rate variance
(22.5-21.5)*25220 = Labour Rate Variance
Labour rate Variance = $ 25,220 (Unfavourable)
a) ($25,220) in the Labor Rate Variance column = Solution for this Question
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