Asked by Heather Hernandez on Jun 15, 2024
Verified
Fluegge Incorporated has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours. The company has reported the following actual results for the product for December:
The labor efficiency variance for the month is closest to:
A) $3,604 Unfavorable
B) $3,604 Favorable
C) $3,502 Favorable
D) $3,502 Unfavorable
Manufacturing Overhead
All indirect costs associated with manufacturing, such as indirect materials, indirect labor, and other overhead costs.
Labor Efficiency Variance
The difference between the actual labor hours used and the standard labor hours expected, multiplied by the standard labor rate.
- Carry out the computation and examination of efficiency and rate differences in direct labor.
Verified Answer
FK
Faisal KassabJun 22, 2024
Final Answer :
C
Explanation :
To calculate the labor efficiency variance, we need to compare the actual direct labor hours worked with the standard direct labor hours allowed for the actual output.
Actual direct labor hours = 6,300
Standard direct labor hours allowed = 7,700 (11,000 units x 0.7 DLH per unit)
So, the labor efficiency variance = (standard hours allowed - actual hours) x standard rate per hour
= (7,700 - 6,300) x $0.45
= $630 x $0.45
= $283.50 favorable
Therefore, the closest option is C) $3,502 Favorable.
Actual direct labor hours = 6,300
Standard direct labor hours allowed = 7,700 (11,000 units x 0.7 DLH per unit)
So, the labor efficiency variance = (standard hours allowed - actual hours) x standard rate per hour
= (7,700 - 6,300) x $0.45
= $630 x $0.45
= $283.50 favorable
Therefore, the closest option is C) $3,502 Favorable.
Learning Objectives
- Carry out the computation and examination of efficiency and rate differences in direct labor.
Related questions
Milar Corporation Makes a Product with the Following Standard Costs ...
Hofbauer Incorporated Has Provided the Following Data Concerning One of ...
Chhom Corporation Makes a Product Whose Direct Labor Standards Are ...
Wolery Incorporated Has Provided the Following Data Concerning One of ...
The Following Labor Standards Have Been Established for a Particular ...