Hurren Corporation makes a product with the following standard costs: The compan

Question

Hurren Corporation makes a product with the following standard costs:

The company reported the following results concerning this product in June.

The company applies variable overhead on the basis of direct labor-hours. The direct materials price variance is computed when the materials are purchased.

The labor efficiency variance for June is:

Hurren Corporation makes a product with the following standard costs:

Hurren Corporation makes a product with the following standard costs: The company reported the following results concerning this product in June. The company applies variable overhead on the basis of direct labor-hours. The direct materials price variance is computed when the materials are purchased. The labor efficiency variance for June is:

Explanation / Answer

Labour efficiency variance = (std hrs for actual output-actual hrs)*std rate per hour = (4550-4500)*19 = 950(F) working note Std hrs for actual output = 6500*0.7 = 4550

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