Mohammed Company Employs a Standard Cost System During June, Mohammed Planned to Produce 24,000 Units of Product

question 96

Multiple Choice

Mohammed Company employs a standard cost system. Mohammed has established the following standards for one unit of product:
$\begin{array} { | c | c | c | c|} \hline& \text { Standard Quantity } & \text { Standard Price } & \text { Standard Cost } \\\hline \text { Direct materials } & 12.0 \text { pounds } & \$ 7.00 / \text { pound } & \$ 84.00 \\\text { Direct labor } & 2.6 \text { hours } & \$ 22.00 / \text { hour } & 57.20\\\hline\end{array}$
During June, Mohammed planned to produce 24,000 units of product. It purchased 330,000 pounds of direct material at a total cost of $2,343,000. The total factory wages for June were $1,440,000. Mohammed manufactured 25,000 units of product during June using 302,000 pounds of direct material and 64,000 direct labor hours. How much is the labor rate variance?

• A) $32,000 unfavorable
• B) $22,000 favorable
• C) $10,000 favorable
• D) $35,200 unfavorable