Answer Corporation Uses Standard Cost System $\text {Standard Costs}$ $\begin{array}{ll}\text { Direct materials } & 2,500 \text { kilograms } @ \$ 8 \\\text { Direct labor } & 7,500 \text { hours } @ \$ 12\end{array}$

Answer Corporation uses standard cost system.The standard costs and actual costs for direct materials, direct labor, and factory overhead for the manufacture of 2,500 units of product are as follows: $\text {Standard Costs}$
$\begin{array}{ll}\text { Direct materials } & 2,500 \text { kilograms } @ \$ 8 \\\text { Direct labor } & 7,500 \text { hours } @ \$ 12\end{array}$

$\text { Actual Costs }$
$\begin{array}{ll}\text { Direct materials } & 2,600 \text { kilograms } @ \$ 8.75 \\\text { Direct labor } & 7,400 \text { hours } @ \$ 11.40\end{array}$

? Factory overhead (100% capacity - 10,000 hrs.) :
Variable cost @ $2 per hour
Total variable cost, $18,000
Fixed cost @ $0.80 per hour
Total fixed cost, $8,000
?
The amount of the direct labor rate variance is:

A) $4,440 unfavorable.
B) $4,500 favorable.
C) $4,440 favorable.
D) $4,500 unfavorable.

Correct Answer:

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