This Question: 10 pts 9 of 10 (0 complete) This Test: 100 pts possible := Questi

Question

This Question: 10 pts 9 of 10 (0 complete) This Test: 100 pts possible := Question Help Trendy Ts Corporation manufactures t-shirts, which is its only product. The standards fort-shirts are as follows: Standard direct labor cost per hour Standard direct labor hours per t- shirt During the month of January, the company produced 1,000 t- shirts. Related production data for the month follows: Actual direct labor hours Actual direct labor cost incurred $21.00 0.4 590 $10,030 What is the direct labor efficiency variance for the month? O A. $2,360 unfavorable OB· $2,360 favorable O C. $3,990 favorable O D. $3,990 unfavorable

Explanation / Answer

First note that actual labour rate per hour that was paid by the company during this period was-

$10030/590hours=$17 per hour

Labor rate variance = (AR-SR)*AH

AR=Actual labor rate per hour

SR=Standard labor rate per hour

AH=Actual hours worked

Thus,

Labor rate variance = ($10030/590hours-$21per hour)*590hours

=$2360 Favourable (since we only paid $17per hour and the standard is $21per hour)

Thus the answer is option (B)

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