Reference no: EM132615472

Milar Corporation makes a product with the following standard costs:

                                    Standard Quantity or Hours                       Standard Price or Rate

Direct materials             6.5 pounds                                                 $6.00 per pound

Direct labor                   0.8 hours                                                  $25.00 per hour

Variable overhead               0.8 hours                                                $11.50 per hour

• In January the company produced 3,360 units using 13,440 pounds of the direct material and 2,808 direct labor-hours. During the month, the company purchased 16,900 pounds of the direct material at a cost of $14,200. The actual direct labor cost was $69,795 and the actual variable overhead cost was $30,940.
• The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.

Problem 1: The labor rate variance for January is:

A. $405 F

B. $405 U

C. $2,595 U

D. $2,595 F