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Shade Company adopted a standard cost system several years ago. The standard costs for direct...

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Accounting

Shade Company adopted a standard cost system several years ago. The standard costs for direct labor and direct materials for its single product are as follows: Materials (5 kilograms $12/kilogram) = $60/unit; direct labor (3.5 hours/unit $20/hour) = $70/unit. All materials are issued at the beginning of processing. The operating data shown below were taken from the records for December:

In-process beginning inventory None
In-process ending inventory80% complete as to labor 970 units
Units completed during the period 6,720 units
Budgeted output 7,230 units
Purchases of materials (in kilograms) 40,500
Total actual direct labor cost incurred $ 530,138
Direct labor hours worked (AQ) 26,600 hours
Materials purchase-price variance $ 2,025 favorable
Increase in materials inventory in December 1,800 kilograms

The direct labor rate variance for December, to the nearest dollar, was:

Multiple Choice

  • $1,862 favorable.

  • $5,922 favorable.

  • $8,062 unfavorable.

  • $24,682 unfavorable.

  • $59,682 unfavorable.

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