Eliezrie Corporation makes a product with the following standard costs: In Janua

Question

Eliezrie Corporation makes a product with the following standard costs: In January the company's budgeted production was 7,400 units but the actual production was 7,500 units. The company used 45,580 kilos of the direct material and 2,030 direct labor-hours to produce this output. During the month, the company purchased 48,500 kilos of the direct material at a cost of $53,350. The actual direct labor cost was $18,473 and the actual variable overhead cost was $7,714. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The labor efficiency variance for January is: $2,200 U $2,002 F $2,200 F $2,002 U

Explanation / Answer

Labor efficiency variance = SR (AH -SH)

                                              = 10 [2030 - (7500 * .3) ]

                                              = 10[ 2030- 2250 ]

                                             = 10 * - 220

                                           = -2200 (F)

Correct option is ""C"

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