Smith Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours
Question:
Smith Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: Inputs Standard Quantity or Hours Standard Price or Rate Standard Cost Direct materials 8 pounds $ 4 per pound $ 32.00 Direct labor 0.50 hours $ 10 per hour 5.00 Variable overhead 0.50 hours $ 20 per hour 10.00 Total standard cost per unit $ 47.00 During September the company actually produced and sold 2,500 units and incurred the following costs: a. Purchased 28,000 pounds of raw materials at a cost of $ 4.25 per pound. b. 21,500 pounds material used in Production c. Direct laborers worked 1,300 hours at a rate of $ 9.50 per hour. d. Total variable manufacturing overhead for the month was $27,000 Required: Calculate the Labor Efficiency Variance for the month of September
Introduction to Managerial Accounting
ISBN: 978-0078025792
7th edition
Authors: Peter Brewer, Ray Garrison, Eric Noreen