Shade Company adopted a standard cost system several years ago. The standard cos

Question

Shade Company adopted a standard cost system several years ago. The standard costs for direct labor and direct materials for its single product are as follows: Materials (4.50 kilograms × $10.00/kilogram) = $45.00/unit. Direct labor (3.20 hours × $18.00 per hour) = $57.60/unit. All materials were issued at the beginning of processing. The operating data shown below were taken from the records for December: In-process beginning inventory None In-process ending inventory - 70.00% complete as to labor 862 units Units completed during he period 6,050 units Budgeted output 6,260 Purchases of materials (in kilograms) 35,000 Total actual direct labor cost incurred $480,150 Direct labor hours worked (AQ) 23,440 hours Materials purchase-price variance $1,440 favorable Increase in materials inventory in December 1,409 kilograms The direct labor efficiency variance for December is: $96,914 unfavorable $38,684 unfavorable $38,684 favorable $58,230 unfavorable $58,230 favorable Shade Company adopted a standard cost system several years ago. The standard costs for direct labor and direct materials for its single product are as follows: Materials (4.50 kilograms × $10.00/kilogram) = $45.00/unit. Direct labor (3.20 hours × $18.00 per hour) = $57.60/unit. All materials were issued at the beginning of processing. The operating data shown below were taken from the records for December: In-process beginning inventory None In-process ending inventory - 70.00% complete as to labor 862 units Units completed during he period 6,050 units Budgeted output 6,260 Purchases of materials (in kilograms) 35,000 Total actual direct labor cost incurred $480,150 Direct labor hours worked (AQ) 23,440 hours Materials purchase-price variance $1,440 favorable Increase in materials inventory in December 1,409 kilograms The direct labor efficiency variance for December is: $96,914 unfavorable $38,684 unfavorable $38,684 favorable $58,230 unfavorable $58,230 favorable

Explanation / Answer

Answer:

Standard labor hours for actual output & ending WIP

= 6,050 units * 3.2 hours *100% + 862 units *3.2 hours*70% = 19,360+1,930.88 = 21,290.88 hours

Direct Labor efficiency variance = standard rate(Standard hours - Actual Hours)

= $18.00 per hour ( 21,290.88 hours - 23,440 hours) = $38,684.16 - Unfavorable (ans)

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