The Harwood Company makes Harwood tables for which the following standards have
ID: 2501158 • Letter: T
Question
The Harwood Company makes Harwood tables for which the following standards have been developed:
Standard Inputs Standard Price
Expected for Each Expected per
Unit of Output Unit of Output
Direct materials 10 pounds $4 per pound
Direct labor 3 hours $16 per hour
Company planned to produce 200 tables in the month. The actual production was 220 tables. Direct materials purchased and used were 2,100 pounds at an actual price of $4.40 per pound. The company incurred actual direct labor costs of $10,620 for total 590 hours.
What is the direct labor efficiency variance for the month of March?
a.
$1,120 unfavorable
b.
$1,260 favorable
c.
Correct answer not listed
d.
$1,120 favorable
e.
$1,260 unfavorable
a.
$1,120 unfavorable
b.
$1,260 favorable
c.
Correct answer not listed
d.
$1,120 favorable
e.
$1,260 unfavorable
Explanation / Answer
We Know that :
Direct Labor Effciency Variance:
= Actual hours* Standard Rate – Standard Hours*Standard Rate
Actual Hours Per Unit of Output: 590/220 = 2.68 Hrs
Standard Rate: $16
Standard Hours: 3 Hrs
By this:
(2.68)16 – (3)16 = -5.09
Unit Produced 220
Efficiency -5.09
= 1119.80 or 1120 Favorable since negative variance is favorable
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