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 (5.30 kilograms × $12.00/kilogram) = $63.60/unit. Direct labor (3.70 hours × $21.00 per hour) = $77.70/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 - 90.00% complete as to labor 1,008 units Units completed during he period 6,990 units Budgeted output 7,610 Purchases of materials (in kilograms) 41,000 Total actual direct labor cost incurred $561,376 Direct labor hours worked (AQ) 27,770 hours Materials purchase-price variance $1,690 favorable Increase in materials inventory in December 1,628 kilograms The direct labor efficiency variance for December is: $30,442 favorable $30,442 unfavorable $52,236 favorable $21,794 favorable $21,794 unfavorable 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 (5.30 kilograms × $12.00/kilogram) = $63.60/unit. Direct labor (3.70 hours × $21.00 per hour) = $77.70/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 - 90.00% complete as to labor 1,008 units Units completed during he period 6,990 units Budgeted output 7,610 Purchases of materials (in kilograms) 41,000 Total actual direct labor cost incurred $561,376 Direct labor hours worked (AQ) 27,770 hours Materials purchase-price variance $1,690 favorable Increase in materials inventory in December 1,628 kilograms The direct labor efficiency variance for December is: $30,442 favorable $30,442 unfavorable $52,236 favorable $21,794 favorable $21,794 unfavorable

Explanation / Answer

Actual output

Ending WIP 1008 @90% = 907.2

Add completed                 =6990

total output                       = 7897.20

Direct labor efficiency variance = ( Std hrs allowed - Actual hours) std rate

                                                     = (3.7*7897.20 - 27,770)21

                                                    = $30,442(F)

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