Question

Welch Company budgeted the following cost standards for the current year:

Direct materials = 1.40 pounds per unit @ $1.50 per pound
Direct labor = 0.75 hours per unit @ $6 per hour
Actual production and costs were as follows:
Units produced = 2,800
Direct materials used = 4,500 lbs.
Direct materials purchased = 5,000 lbs. @ a cost of $5,850
Direct labor incurred = 2,000 hours at a cost of $13,000The labor efficiency variance was

Question 8 options:

	$600 F
	$400 U
	$4,800 F
	$1,000 U

Answer 1

Answer $600 F

Labor efficiency variance = ( Actaul hours - standard hours ) * Standard rate per hour
= ( 2,000     -   2,100       ) * 6
= $600 F

Standard hours = Actual units * standard hour per unit
= 2,800 * 0.75
= 2,100 hours