URGENT- Labor effiency variance calculation, see below for the entire snipet: Ja
ID: 2474159 • Letter: U
Question
URGENT- Labor effiency variance calculation, see below for the entire snipet:
Jackson Industries uses a standard cost system in which direct materials inventory is carried at standard cost. Jackson has established the following standards for one unit of product. Direct materials.... Direct labor. Standard Quantity 5 pounds 1.25 hours Standard Price or Rate $3.60 per pound $12.00 per hour Standard Cost $18.00 $15.00 During May, Jackson purchased 125,000 pounds of direct material at a total cost of $475,000. The total factory wages for May were $364,000, 90 percent of which were for direct labor Jackson manufactured 22,000 units of product during May using 108,000 pounds of direct material and 28,000 direct labor-hours. The labor efficiency variance for May is: $7.200 Favorable $5,850 Unfavorable O $5,850 Favorable O $6,000 UnfavorableExplanation / Answer
The formula to calculate Labour Efficiency Variance =
( Standard Hours for actual Production - Actual Hours) * Standrad Rate per Hour
Standard Hour per Unit = 1.25 Hours
Number of Units Produced = 22,000
Standard Hours for actual Production = 22000 * 1.25 = 27,500
Actual Hours = 28,000
Standard Labour Rate per Hour = $ 12,
After inserting the above values in the formula, we get
( 27500 - 28000 ) * 12 = ( - 500 ) * 12 = 6,000 Unfavorable
The Answer is last one that is $ 6,000 Unfavorable.
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