Standard Cost Per Unit Standard Quantity or Standard Price or Rate Direct materi

Question

Standard Cost Per Unit Standard Quantity or Standard Price or Rate Direct materials Direct labor Variable overhead Hours 6.40 grams 0.35 hours 0.35 hours $8.00 per gram $14.00 per hour $7.00 per hour $51.20 $4.90 $ 2.45 The company reported the following results concerning this product in June: Originally budgeted output Actual output Raw materials used In production Purchases of raw materials Actual direct labor-hours Actual cost of raw materials purchases Actual direct labor cost Actual variable overhead cost 3,400 units 3,540 units 20,524 grams 23,424 grams 040 hours $173,340 $13,780 $6,553 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 var iance for June is $2,758F O $140U O $2758Uu

Explanation / Answer

Answer:-

Direct Labor Efficiency variance=(Standard hours-Actual hours)*Standard rate per hour

                     =(1239 hours- 1040 hours)*$14 per hour

=$2786 Favourable

Where:-

Standard Hours = No. of hours per unit*Actual output

                               = .35 hours per unit *3540 units =1239 hours

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