Lavender Company produces several products in its factory, including a karate robe. The company uses a standard cost system. According to the standards that have been set for the robes, the factory should work 780 direct labor hours eac month and produce 1,950 robes. Certain standard costs associated with this level of production are as follows:
Show me the easiest way to solve this problem step by step and clearly. Show me how you get every number. Thank you. Correct answer for #4 is (A) 760 Unfavorable and #5 is (b) 120 favorable. Tell me why is it unfavorable and favorable.
Homework Answers
4) Labor efficiency variance = (Standard hour-actual hour)standard rate
= (2000*.40-760)*9
Labor efficiency variance = 360 F
Labor rate variance = 400+360 = 760 U
So answer is a) $760 Unfavorable
5) Variable overhead efficiency variance = (800-760)*3 = 120 F
So answer is b) $120 Favorable
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