Miguez Corporation Makes a Product with the Following Standard Costs

question 120

Multiple Choice

Miguez Corporation makes a product with the following standard costs: The company budgeted for production of 2,600 units in September, but actual production was 2,500 units. The company used 5,440 liters of direct material and 1,680 direct labor-hours to produce this output. The company purchased 5,800 liters of the direct material at $7.20 per liter. The actual direct labor rate was $24.10 per hour and the actual variable overhead rate was $1.90 per hour.
The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.
The labor rate variance for September is:

• A) $3,675 F
• B) $3,528 U
• C) $3,528 F
• D) $3,675 U

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Definitions:

Vouchers Payable

A liability account in the general ledger that represents the controlling account for the sum of individual vouchers.

Voucher Register

A special journal replacing the purchases journal; it records prenumbered vouchers at the time the liabilities are incurred.

Check Register

A special journal that replaces the cash payments journal in recording payments of vouchers.

Special Journal

A specialized accounting journal designed to facilitate the recording of specific types of transactions, such as sales or purchases, for increased efficiency and accuracy.