Question

MIAMI Company has set the following standards related to the prime costs for its single product:...

MIAMI Company has set the following standards related to the
prime costs for its single product:

                    standard quantity       standard price
direct materials    11 pounds per unit      $3.00 per pound
direct labor         8 hours per unit       $14.00 per hour

MIAMI Company reported the following information for the month
of September:

1.  The direct material quantity variance was $7,380 unfavorable.
2.  The direct labor rate variance was $4,410 favorable.
3.  8,140 units were produced.
4.  Direct materials were purchased at a price of $3.75 per pound.
5.  The actual rate paid to direct laborers was $13.93 per hour.
6.  At September 1, the direct materials inventory consisted of
    8,000 pounds. At September 30, the direct materials inventory
    totaled 5,000 pounds.

Calculate the direct labor efficiency variance for September. If
the variance is favorable, place a minus sign in front of your
answer (i.e., -1000). If the variance is unfavorable, enter your
answer as a number (i.e., 1000).

Please label your answer as answer=.......................

Homework Answers

Answer #1

Standard time = 8 hours per unit

Actual output = 8,140 units

Standard time for actual output = Standard time x Actual output

= 8 x 8,140

= 65,120 hours

Actual rate = $13.93 per hour

Standard rate = $14 per hour

Direct labor rate variance = Actual time x (Standard rate - Actual rate)

4,410 = Actual time x ( 14 - 13.93)

Actual time = 63,000 hours

Direct labor efficiency variance = Standard rate x (Standard time - Actual time)

= 14 x (65,120 - 63,000)

= - $29,680

Answer = - $29,680

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