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
Homework Answers
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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