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Question - Doe Corporation makes a product with the following standard costs:
Inputs
Standard Quantity or Hours
Standard Price or Rate
Standard Cost Per Unit
Direct materials
4.9 grams
$4.00 per gram
$19.60
Direct labor
0.7 hours
$14.00 per hour
$9.80
Variable overhead
$9.00 per hour
$6.30
The company reported the following results concerning this product in June.
Originally budgeted output
6,300
units
Actual output
6,200
Raw materials used in production
28,430
grams
Actual direct labor-hours
4,000
hours
Purchases of raw materials
32,300
Actual price of raw materials purchased
$4.10
per gram
Actual direct labor rate
$14.90
per hour
Actual variable overhead rate
$8.70
The company applies variable overhead on the basis of direct labor-hours. The direct materials price variance is computed when the materials are purchased.
Required - Compute the labor rate variance for June?
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