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Jackson Industries uses a standard cost system in which direct materials inventory is carried at standard...

Jackson Industries uses a standard cost system in which direct materials inventory is carried at standard cost. Jackson has established the following standards for one unit of product.
  

Standard Quantity

Standard Price or Rate

Direct materials

5 pounds

$3.60 per pound

Direct labor

1.25 hours

$12.00 per hour


During May, Jackson purchased 125,000 pounds of direct material at a total cost of $475,000. The total factory wages for direct labor, for May were $327,600. Jackson manufactured 22,000 units of product during May using 108,000 pounds of direct material and 28,000 direct labor-hours.

The labor efficiency variance for May is:

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Answer #1

The labor efficiency variance for May is: $6000 Unfavorable

Working

Labour Efficiency Variance
( Standard Hours - Actual Hours ) x Standard Rate
( 27500 - 28000 ) x $           12.00
-6000
Variance $                6,000.00 Unfavourable-U

.

Standard DATA for 22000 Units
Quantity (SQ) Rate (SR) Standard Cost
[A] [B] [A x B]
Direct labor ( 1.25 Hour x 22000 Units)=27500 Hour $                12.00 $          330,000.00
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