Company uses standard costing and has established the following standards for it

ID: 2568184 • Letter: C

Question

Company uses standard costing and has established the following standards for its single product:

Direct materials .......... 2 gallons at $3 per gallon

Direct labor .............. 0.5 hours at $8 per hour

Variable manuf. overhead .. 0.5 hours at $2 per hour

During November, the company made 4,000 units and incurred the following costs:

Direct materials purchased ........ 8,100 gallons at $3.10 per gallon

Direct materials used ............. 7,600 gallons

Direct labor used ................. 2,200 hours at $8.25 per hour

Actual variable manuf. overhead ... $4,175

Q) The labor efficiency variance for November was _________________

How to get AH, AR, SH, and SR?

Labour efficiency variance = (standard hour-actual hour)standard rate

= (4000*.50-2200)8

Labour efficiency variance = 1600 Unfavourable

Ah = actual hours given in question = 2200

AR = Actual rate given in question = 8.25 per hour

Sh = standard hour per unit given in question 0.50 per unit so in 4000 unit (4000*.50) = 2000 hour

SR = Standard rate given in question = 8 per hour

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