Question

Tharaldson Corporation makes a product with the following standard costs:Standard Quantity or Hours Standard Price or Rate Standard Cost Per UnitDirect materials 6.3 ounces $ 2.00 per ounce $ 12.60Direct labor 0.4 hours $ 11.00 per hour $ 4.40Variable overhead 0.4 hours $ 6.00 per hour $ 2.40The company reported the following results concerning this product in June.Originally budgeted output 3,300 unitsActual output 2,600 unitsRaw materials used in production 21,300 ouncesPurchases of raw materials 22,400 ouncesActual direct labor-hours 470 hoursActual cost of raw materials purchases $ 42,000 Actual direct labor cost $ 13,300 Actual variable overhead cost $ 3,650 The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.The labor efficiency variance for June is:rev: 10_25_2017_QC_CS-106922Garrison 16e Rechecks 2017-10-31Multiple ChoiceA. $9,350 FB. $6,270 UC. $9,350 UD. $6,270 F

Answer 1

Direct labor time (efficiency) variance= $6,270 favorable

Step-by-step explanation:

Giving the following information:

Standard= Direct labor 0.4 hours $ 11.00 per hour

Actual output 2,600 units

Actual direct labor-hours 470 hours

To calculate the direct labor efficiency variance, we need to use the following formula:

Direct labor time (efficiency) variance= (Standard Quantity - Actual Quantity)*standard rate

Standard quantity= 0.4*2,600= 1,040

Direct labor time (efficiency) variance= (1,040 - 470)*11

Direct labor time (efficiency) variance= $6,270 favorable