Question

Task Master Enterprises employs a standard cost system in which direct materials inventory is carried at...

Task Master Enterprises employs a standard cost system in which direct materials inventory is carried at standard cost. Task Master has established the following standards for the prime costs of one unit of product.

Standard Quantity Standard Price Standard cost

Direct materials 10 pounds $2.00 per pound $20.00

Direct Labor 20 hour $9.00 per hour $1.80

$21.80

During November, Taskmaster purchased 231,000 pounds of direct materials at a total cost of $508,200. The total factory wages for November were $48,000, 80% of which were for direct labor. Task Master manufactured 22,000 units of product during november using 200,000 pounds of direct materials and 5000 direct labor hours. What is the direct labor efficiency variance for November

A $2,037

B $5,400

C $5,808

D $4,200

Homework Answers

Answer #1

Ans. Option B $5400

Calculation:

Direct labor efficiency variance = (standard hours - actual hours) * standard rate

= (4400 - 5000) * 9

= -600 * 9

= -5400

= 5400 unfavorable

*Standard hours = Number of units produced * direct labor hour per unit

= 22000 * 0.20

= 4400

[Note: There is typo in the question, the standard quantity (direct labor) is 0.20 hours not 20 because standard cost is the multiplication of standard hour and standard rate per hour which is 1.80 (0.20*9).

You must recheck the question to find the typo]

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