Question - Doe Corporation makes a product with the following standard costs:
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Inputs
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Standard Quantity or Hours
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Standard Price or Rate
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Standard Cost Per Unit
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Direct materials
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4.9 grams
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$4.00 per gram
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$19.60
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Direct labor
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0.7 hours
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$14.00 per hour
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$9.80
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Variable overhead
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0.7 hours
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$9.00 per hour
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$6.30
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The company reported the following results concerning this product in June.
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Originally budgeted output
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6,300
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units
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Actual output
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6,200
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units
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Raw materials used in production
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28,430
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grams
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Actual direct labor-hours
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4,000
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hours
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Purchases of raw materials
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32,300
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grams
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Actual price of raw materials purchased
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$4.10
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per gram
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Actual direct labor rate
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$14.90
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per hour
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Actual variable overhead rate
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$8.70
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per hour
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The company applies variable overhead on the basis of direct labor-hours. The direct materials price variance is computed when the materials are purchased.
Required - Compute the labor rate variance for June?