The Alpha Company Produces Toys for National Distribution

Multiple Choice

The Alpha Company produces toys for national distribution. Standards for a particular toy are:

Materials: 12 grams per unit at 56?per gram.
Labour: 2 hours per unit at $2.75 per hour.

During the month of December, the company produced 1,000 units. Information for the month follows:

Materials: 14,000 grams were purchased and used at a total cost of $7,140.
Labour: 2,500 hours worked at a total cost of $8,000.


-What was the labour rate variance?

A) $1,125 favourable.
B) $1,125 unfavourable.
C) $2,500 favourable.
D) $2,500 unfavourable.