Corporation makes a product with the following standard costs In November the co

Question

Corporation makes a product with the following standard costs In November the company's budgeted production was 2,900 units but the actual production was 3,000 unit. The company used 27,670 grams of the direct material and 1,390 direct-labor-hours to produce output. During the month, the company purchased 31,700 grams of the direct material at a cost of $196,540. The actual direct labor cost was $29,607 and the actual variable overhead cost was $2,502. 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 November is: a) $2,530U b) $2,530F c) $2,343 F d) $2,343U

Explanation / Answer

Answer:-

Labor Efficiency Variance for November is:+-

Standard hours = Actual output x 0.5 hours =3,000 x 0.5 =1500 hours

Labor variance efficiency = (Actual Hours -Standard hours) x Standard rate

Labor variance efficiency = (1,390-1500) x 23 = $2,530 F

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