A company uses the following standard costs to produce a single unit of output.

Question

A company uses the following standard costs to produce a single unit of output.

During the latest month, the company purchased and used 68,000 pounds of direct materials at a price of $1.20 per pound to produce 10,000 units of output. Direct labor costs for the month totaled $20,976 based on 2,760 direct labor hours worked. Variable manufacturing overhead costs incurred totaled $6,900 and fixed manufacturing overhead incurred was $17,000. Based on this information, the direct labor efficiency variance for the month was:

a. $3,024 favorable

b. $1,104 favorable

c. $1,920 unfavorable

d. $1,920 favorable

e. $1,104 unfavorable

Direct materials 7 pounds at $1.00 per pound = $ 7.00 Direct labor 0.3 hour at $8.00 per hour = $ 2.40 Manufacturing overhead 0.3 hour at $3.30 per hour = $ 0.99

Explanation / Answer

Direct labour efficiency variance = (Standard hour-actual hour)Standard rate

                                               = (10000*.30-2760)8

Direct labour efficiency variance = 1920 favorable

so answer is d) $1,920 favorable

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.