The Collins Corporation Uses Standard Costing and Has Established the Following

Multiple Choice

The Collins Corporation uses standard costing and has established the following direct material and direct labor standards for each unit of the single product it makes:

• Direct materials: 4 gallons at $8 per gallon
• Direct labor: 1 hour at $16 per hour

During July, the company made 6,000 units of product and incurred the following costs:

• Direct materials purchased: 26,800 gallons at $8.20 per gallon
• Direct materials used: 25,200 gallons
• Direct labor used: 5,600 hours at $15.30 per hour

The direct materials purchases variance is computed when the materials are purchased.

-The labor rate variance for July was:

A) $3,920 Unfavorable
B) $6,120 Unfavorable
C) $1,120 Favorable
D) $3,920 Favorable