Question

Taylor Enterprises purchased 56,000 pounds (cost = $420,000) of direct material to be used in the manufacture of the company's sole product. According the production specifications, each completed unit requires five pounds of direct material at a standard cost of $7.80 per pound. Direct materials consumed by the end of the period totaled 53,500 pounds in the manufacture of 10,900 finished units.
An examination of Taylor's payroll records revealed that the company worked 22,000 labor hours (cost = $319,000) during the period, and specifications called for each completed unit requiring two hours of labor at a standard cost of $14.80 per hour.

Assume that the company computes variances at the earliest point in time.

Taylor's direct-labor efficiency variance was:

A. $2,900F

B. $2,900U

C. $2,960F

D. $2,960U

E. None of the answers are correct.

Answer 1

Answer:

The right answer is Option (D).

Explanation:

According to the Scenario, the given data is:

Standard cost : $14.80 / hour

Total working hour: 22,000 hour

Total units : 10,900 units

working hour for a single unit: 2 hours/unit

So, the direct-labor efficiency balance can be calculated as:

Direct-labor efficiency variance = Standard Cost × ( Total working hour - Standard working hour )

Where, Standard working hour = total units × working hours per unit

= 10900 × 2 = 21800 hours

So, Direct-labor efficiency variance = 14.80 × ( 22000 - 21800 )

= 14.80 × 200 = 2960 ( unfavorable )

Hence the correct answer is option (D).

Answer 2

Answer: D)

Explanation: