24. Jackson Industries uses a standard cost system in which direct materials inv

Question

24. Jackson Industries uses a standard cost system in which direct materials inventory is carried at standard cost. Jackson has established the following standards for one unit of product:

During May, Jackson purchased 60,900 pounds of direct material at a total cost of $146,160. The total factory wages for May were $95,700, 90 percent of which were for direct labor. Jackson manufactured 11,000 units of product during May using 41,800 pounds of direct material and 15,940 direct labor-hours.

The labor efficiency variance for May is:

A. $3,240 Favorable

B. $2,040 Unfavorable

C. $3,240 Unfavorable

D. $840 Favorable

Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 4 pounds $2.20 per pound $8.80 Direct labor 1.40 hours $6.00 per hour $8.40

Explanation / Answer

Labor efficiency variance for May = 6*(15940-11000*1.4)= 3240 Unfavorable Option C is correct

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