Hurren Corporation makes a product with the following standard costs Standard Qu

Question

Hurren Corporation makes a product with the following standard costs Standard Quantity orlStandard Price orStandard Cost Direct materials Direct labor Variable overhead Hours 5.4 grams 0.9 hours 0.9 hours Rate $8.00 per gram $19.00 per hour $8.00 per hour Per Unit $43.20 $1710 $7.20 The company reported the following results concerning this product in June 5,600 units 5,500 units Originally budgeted output Actual output Raw materials used in production Actual direct labor-hours Purchases of raw materials Actual price of raw materials purchased Actual direct labor rate Actual variable overhead rate 28,480 grams 4,700 hours $8.10 per gram $770 per hour 32,800 grams $19.90 per hour 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 June is

Explanation / Answer

Labor efficiency variance = Standard rate*(Actual hours-Standard hours) =19*(4700-5500*0.9)= 4750 Favorable

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