Grub Chemical Corporation has developed cost standards for the production of its new chocolate, ChocO. The variable cost standards below relate to each 10 gallon batch of ChocO: Standard Cost Per Batch Milk chocolate (2 pounds × $0.85 per pound) $ 1.70 Direct labor (1.25 hours × $12.00 per hour) $ 15.00 Variable overhead (1.25 hours × $44.00 per hour) $ 55.00 Variable manufacturing overhead at Grub is applied based on direct labor-hours. The actual results for last month were as follows: Number of batches produced 3,800 Direct labor-hours incurred 4,510 Pounds of chocolate purchased 9,000 Pounds of chocolate used in production 7,880 Cost of chocolate purchased $ 7,200 Direct labor cost $ 53,218 Variable manufacturing overhead cost $ 205,700 What is ChocO's labor rate variance? Multiple Choice $902 Favorable $2,880 Favorable $3,782 Favorable $14,432 Favorable
Grub Chemical Corporation has developed cost standards for the production of its new chocolate, ChocO. The variable cost standards below relate to each 10 gallon batch of ChocO: Standard Cost Per Batch Milk chocolate (2 pounds × $0.85 per pound) $ 1.70 Direct labor (1.25 hours × $12.00 per hour) $ 15.00 Variable overhead (1.25 hours × $44.00 per hour) $ 55.00 Variable manufacturing overhead at Grub is applied based on direct labor-hours. The actual results for last month were as follows: Number of batches produced 3,800 Direct labor-hours incurred 4,510 Pounds of chocolate purchased 9,000 Pounds of chocolate used in production 7,880 Cost of chocolate purchased $ 7,200 Direct labor cost $ 53,218 Variable manufacturing overhead cost $ 205,700 What is ChocO's labor rate variance? Multiple Choice $902 Favorable $2,880 Favorable $3,782 Favorable $14,432 Favorable
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Grub Chemical Corporation has developed cost standards for the production of its new chocolate, ChocO. The variable cost standards below relate to each 10 gallon batch of ChocO:
| Standard Cost Per Batch | |
|---|---|
| Milk chocolate (2 pounds × $0.85 per pound) | $ 1.70 |
| Direct labor (1.25 hours × $12.00 per hour) | $ 15.00 |
| Variable |
$ 55.00 |
Variable manufacturing overhead at Grub is applied based on direct labor-hours. The actual results for last month were as follows:
| Number of batches produced | 3,800 |
|---|---|
| Direct labor-hours incurred | 4,510 |
| Pounds of chocolate purchased | 9,000 |
| Pounds of chocolate used in production | 7,880 |
| Cost of chocolate purchased | $ 7,200 |
| Direct labor cost | $ 53,218 |
| Variable |
$ 205,700 |
What is ChocO's labor rate variance?
Multiple Choice
-
$902 Favorable
-
$2,880 Favorable
-
$3,782 Favorable
-
$14,432 Favorable
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