Galla Corporation makes a product with the following standard costs: Picture The

Question

Galla Corporation makes a product with the following standard costs:

Picture

The company budgeted for production of 2,400 units in June, but actual production was 2,500 units. The company used 19,850 pounds of direct material and 980 direct labor-hours to produce this output. The company purchased 21,700 pounds of the direct material at $6.70 per pound. The actual direct labor rate was $19.20 per hour and the actual variable overhead rate was $1.80 per hour.

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:
$400 F
$384 U
$400 U
$384 F

Explanation / Answer

Labour Efficiency Variance = $400 F

Labour Efficiency Variance = (Standard hours - Actual hours) x Standard rate Standard Hours = 0.40 Hrs X 2500 Units = 1000 Hrs Labour Efficiency Variance = (1000 - 980) x 20 = $400 F

Related Questions

Navigate

• Browse (All)
• Browse G
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.