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: $\begin{array}{|l|c|c|c|}\hline & \text { Standard Quantity } & \begin{array}{c}\text { Standard } \\\text { Price }\end{array} & \begin{array}{c}\text { Standard } \\\text { Cost }\end{array} \\\hline \text { Direct materials } & 12.0 \text { pounds } & \$ 7.00 / \text { pound } & \$ 84.00 \\\text { Direct labor } & 2.6 \text { hours } & \$ 22.00 / \text { hour } & 57.20\\\hline\end{array}$ 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

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