Question

Tharaldson Corporation makes a product with the following standard costs:

	Standard Quantity or Hours			Standard Price or Rate			Standard Cost Per Unit
Direct materials		5.4	ounces	$	3.00	per ounce	$	16.20
Direct labor		0.5	hours	$	12.00	per hour	$	6.00
Variable overhead		0.5	hours	$	9.00	per hour	$	4.50

The company reported the following results concerning this product in June.

Originally budgeted output		4,200	units
Actual output		3,800	units
Raw materials used in production		20,400	ounces
Purchases of raw materials		21,500	ounces
Actual direct labor-hours		560	hours
Actual cost of raw materials purchases	$	42,900
Actual direct labor cost	$	14,200
Actual variable overhead cost	$	4,100

The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.

The labor efficiency variance for June is:

Answer 1

labor efficiency variance for June is: $16,080 Favorable

Working

Labor Efficiency Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	1900	-	560	)	x	$           12.00
	16080
	Variance		$           16,080.00			Favourable-F

.

Standard DATA for		3800	Units
	Quantity (SQ)	Rate (SR)	Standard Cost
	[A]	[B]	[A x B]
Direct labor	( 0.5 Hour x 3800 Units)=1900 Hour	$                12.00	$            22,800.00