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

$4,360 U

$4,000 U

$4,360 F

$4,000 F

Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit   Direct materials   4.1 grams   $7.00 per gram $28.70             Direct labor   0.7 hours   $10.00 per hour $7.00             Variable overhead   0.7 hours   $7.00 per hour $4.90          

Explanation / Answer

Labour efficeincy variance = (Actual Hour - Standard Hour) * Standard Rate (4,500 - (0.7*7,000) * 10 = $4,000 F

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