Question

Cromwell manufactures specialty electronic circuitry through a unique photo-electronic process. One of the primary products, Model GT40, has a standard labor time of 0.5 hour and a standard labor rate of $7.00 per hour. During March, the following activities pertaining to direct labor for GT40 were recorded: Direct labor hours used 2,000 Direct labor cost $12,000 Units of GT40 manufactured 3,000 The Labor rate variance and Labor efficiency variance are: Select one:

Answer 1

the labor rate variance and labor efficiency variance is $2,000 favorable and $3,500 unfavorable

Step-by-step explanation:

The computation of the labor rate variance and labor efficiency variance is given below;

For Labor rate variance

= $12,000 - (2000 × 7)

= $2000 F

And, the Labor efficiency variance is

= 7 × (2000 - 3000 × 0.5)

= $3500 U

Hence, the labor rate variance and labor efficiency variance is $2,000 favorable and $3,500 unfavorable