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In: Accounting

Your Corporation uses a standard cost system to collect costs related to the production. The labor...

Your Corporation uses a standard cost system to collect costs related to the production. The labor standards for each unit are 1.2 hours at a standard cost of $18 per hour. During the month, employees work 34,000 hours in the production of 30,000 units. The total labor cost was $649,400. What is the efficiency (quantity) variance for the month?

$37,400 unfavorable

$37,400    favorable

$36,000 unfavorable

$36,000    favorable

Solutions

Expert Solution

Correct Option D i.e. $36,000 Favorable
Budgeted Standard Actual
Quantity/Hrs Rate Amount Quantity/Hrs Rate Amount Quantity/Hrs Rate Amount
Labour 1.2 18 21.6 36000 18          648,000 34000 19.1 649400
Labour Efficiency Variance = (Standard Hrs. - Actual Hrs) Standard Rate
                                                = (36000 - 34000 )*18
         36,000 Favorable

ekkarill92 answered 2 years ago
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