Question

Blumenthal Manufacturing makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Direct materials 3.5 pounds $3.00 per pound Direct labor 0.8 hours $19.00 per hour Variable overhead 0.8 hours $8.00 per hour In July the company produced 3,500 units using 12,240 pounds of the direct material and 1,500 direct labor-hours. During the month, the company purchased 13,000 pounds of the direct material at a cost of $35,100. The actual direct labor cost was $51,612 and the actual variable overhead cost was $20,148. 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 July is: Select one: a. $-24,700.00 b. $-38,000.00 c. $28,500.00 d. $66,500.00

Answer 1

Labor efficiency variance = (Standard hour-actual hour)Standard rate

= (3500*.8-1500)*19

Labor efficiency variance = 24700 F

So answer is a) -$24700