Question

A product's standard cost card specifies that a unit of the product requires 4 direct labor-hours. During September, 3,350 units were made, which was 150 units less than budgeted. The total budgeted direct labor cost for September was $117,600. The direct labor cost incurred during September was $111,850 and 13,450 direct labor-hours were worked. The direct labor efficiency variance for the month was O 1) S415.80 U O 2) $420.00 F 3) $420.00 U O4) $415.80 F Save

Answer 1

Answer:

option (2) $420.00 F

Explanation:

Data provided in the question:

standard direct labor-hours required = 4

Actual units made = 3,350

Budgeted units = 3,350 + 150 = 3,500

Budgeted direct labor cost = $117,600

Direct labor cost incurred = $111,850

Direct labor-hours worked = 13,450

Now,

Labor efficiency variance = (Actual hours - standard hours) × standard rate

also,

Standard rate

= Budgeted direct labor cost ÷ ( direct labor-hours required × Budgeted units )

= $117,600 ÷ ( 4 × 3500 )

= $8.4

Thus,

Labor efficiency variance = [ 13,450 - (4 × 3,350) ] × $8.4

= $420     [positive answer mean Favorable ]

Hence,

The correct answer is option (2) $420.00 F

Answer 2

Answer:

labor efficiency variance = 420 F

so correct option is 2) $420.00 F

Explanation:

given data

product requires = 4 direct labor-hours

unit made = 3,350 units

less than budgeted = 150 units

total budgeted direct labor cost = $117,600

direct labor cost incurred = $111,850

worked = 13,450 direct labor-hours

to find out

direct labor efficiency variance for the month

solution

we get Standard hours that is express as

Standard hours = actual unit produced  × standard labor hour per unit  .................1

put here value

Standard hours = 3350 × 4

Standard hours = 13400

and

standard rate = total budgeted labor cost  ÷ standard units × standard labor hours per unit   ......................2

put here value

standard rate = $\frac{117,600}{3500*4}$

standard rate = 8.4

so labor efficiency variance  will be

labor efficiency variance  = actual hours - standard hours × standard rate   .................3

put here value

labor efficiency variance  = 13450  - 13400 × 8.4

labor efficiency variance = 420 F

so correct option is 2) $420.00 F