Amber Company produces iron table and chair sets. During October, Amber’s costs

Question

Amber Company produces iron table and chair sets. During October, Amber’s costs were as follows:

  Actual purchase price

$ 1.90

per lb.

  Actual direct labor rate

$ 7.10

per hour

  Standard purchase price

$ 1.70

per lb.

  Standard quantity for sets produced

930,000

lbs.

  Standard direct labor hours allowed

15,000

  Actual quantity purchased in October

1,075,000

lbs.

  Actual direct labor hours

8,000

  Actual quantity used in October

960,000

lbs.

  Direct labor rate variance

5,100

F

Required:

5.

Compute the direct labor efficiency variance for October. (Round your intermediate instruction 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.)

Amber Company produces iron table and chair sets. During October, Amber’s costs were as follows:

Explanation / Answer

Workings

Standard direct labor hours allowed 15000 Actual direct labor hours 8000 Difference 7000 direct labor efficiency variance = 7000 *standared rate =7000*7.74                                     54,180

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