Figure 17-2
Rax Company Has Developed the Following Standards for One

question 56

Multiple Choice

Figure 17-2
Rax Company has developed the following standards for one of its products:
Direct materials
12 pounds * £14 per pound
Direct labour
3 hours * £18 per hour
Variable overhead
3 hours * £8 per hour
The following activities occurred during the month of October: $\begin{array}{ll}\text { Materials purchased } & 10,000 \text { pounds at } £ 13.60 \text { per pound } \\\text { Materials used } & 9,000 \text { pounds } \\\text { Units produced } & 800 \text { units } \\\text { Direct labour } & 2,500 \text { hours at } £ 19.00 \text { per hour } \\\text { Actual variable overhead } & £ 22,000\end{array}$ The company records materials price variances at the time of purchase.
-Refer to Figure 17-2. Rax's labour rate variance would be

• A)£4,300 favourable.
• B)£4,300 unfavourable.
• C)£2,500 favourable.
• D)£2,500 unfavourable.

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