Question

Kartman Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 6.5 pounds $ 7.00 per pound $ 45.50 Direct labor 0.6 hours $ 24.00 per hour $ 14.40 Variable overhead 0.6 hours $ 4.00 per hour $ 2.40 In June the company's budgeted production was 3,400 units but the actual production was 3,500 units. The company used 22,150 pounds of the direct material and 2,290 direct labor-hours to produce this output. During the month, the company purchased 25,400 pounds of the direct material at a cost of $170,180. The actual direct labor cost was $57,021 and the actual variable overhead cost was $8,931. 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:

Answer 1

Answer:

Direct labor time (efficiency) variance= $4,560 unfavorable

Explanation:

Giving the following information:

Standard= Direct labor 0.6 hours $ 24.00 per hour $ 14.40

Actual production= 3,500 units.

2,290 direct labor-hours were used.

To calculate the direct labor efficiency variance, we need to use the following formula:

Direct labor time (efficiency) variance= (Standard Quantity - Actual Quantity)*standard rate

Standard quantity= 3,500*0.6= 2,100

Direct labor time (efficiency) variance= (2,100 - 2,290)*24

Direct labor time (efficiency) variance= $4,560 unfavorable