The Thompson Company Uses Standard Costing and Has Established the Following

question 55

Multiple Choice

The Thompson Company uses standard costing and has established the following direct material and direct labor standards for each unit of Lept.

Direct materials: 2 gallons at $4 per gallon
Direct labor: 0.5 hours at $8 per hour

During September, the company made 6,000 Lepts and incurred the following costs:

Direct materials purchased: 13,400 gallons at $4.10 per gallon
Direct materials used: 12,600 gallons
Direct labor used: 2,800 hours at $7.65 per hour
-The labor rate variance for September was:

• A)$1,530 unfavorable
• B)$980 favorable
• C)$280 favorable
• D)$980 unfavorable

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