Question

34. SEMO Vases produces the following standard cost to make a clay vase: Direct Materials: 2 pounds @ $4.00 per pound Direct Labor 3 hours @ $9.00 per hour FOH applied at 60% of Direct Labor After production takes place, SEMO Vases reports the following actual costs to make clay vases: Direct Materials: 2.5 pounds @ $3.50 per pound Direct Labor: 2 hours @ $8.00 per hour Actual FOH cost incurred during production: $15,000. Calculate the Labor Usage (or Efficiency) Variance and state whether it is Favorable or Unfavorable. Enter your answer using the following format ($, then the number using commas and decimal points as appropriate, followed by F for favorable or U for unfavorable)Â For example $4,321.00 F or $123.50 U or $.92 F

Answer 1

Solution)

Standard Direct Labor hours = 3 hours

Standard Direct Labor hour rate = $9.00 per hour

Actual Direct Labor hours = 2 hours

Actual Direct Labor hours = $8.00 per hour

Labor Usage (Efficiency) Variance = (Standard Labour hours - Actual Labor hours ) X Standard Labor hour rate

= (3 - 2) X $9.00

= $9.00

So, Labour Usage (Efficiency) Variance = $9.00 F