Question

Michael Corporation manufactures railroad​ cars, which is its only product. The standards for railroad cars are...

Michael Corporation manufactures railroad​ cars, which is its only product. The standards for railroad cars are as​ follows:

Standard labor hours per car

10

Standard labor cost per direct labor hour

$22.00

During the month of​ March, the company produced

1,650

railroad cars. Related production data for the month​ follows:

Actual direct labor hours

60,000

Actual direct labor total cost

$966,000

What is the direct labor efficiency variance for the​ month?

A.

$354,000

unfavorable

B.

$957,000

unfavorable

C.

$354,000

favorable

D.

$957,000

favorable

0 0
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Answer #1

B. $957,000 unfavorable

Direct labor efficiency variance = (Actual hours - Std hours for actual units) × Std rate

Direct labor efficiency variance = [60,000 - (1,650 × 10)] × $22

Direct labor efficiency variance = $957,000 Unfavorable

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