Reference no: EM132607736

Milar Corporation makes a product with the following standard costs:

                                       Standard Quantity or Hours              Standard Price or Rate

Direct materials                   4.5 pounds                               $ 4.00per pound

Direct labor                         0.8 hours                                $ 21.00 per hour

Variable overhead                   0.8hours                               $ 9.50 per hour

In January the company produced 3,320 units using 13,280 pounds of the direct material and 2,776 direct labor-hours. During the month, the company purchased 16,900 pounds of the direct material at a cost of $14,040. The actual direct labor cost was $57,895 and the actual variable overhead cost was $25,260.

The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.

Question 1: The labor rate variance for January is:

Multiple Choice

Option 1: $401 F

Option 2: $401 U

Option 3: $2,119 U

Option 4: $2,119 F