Hassock Corp. produces woven wall hangings. It takes 2 hours of direct labor to produce a single wall hanging. Hassock’s standard labor cost is $14 per hour. During August, Hassock produced 17,000 units and used 34,200 hours of direct labor at a total cost of $478,200. What is Hassock’s labor efficiency variance for August? Multiple Choice $2,800 favorable. $2,200 unfavorable. $3,400 unfavorable. $1,200 favorable. $2,800 unfavorable.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Hassock Corp. produces woven wall hangings. It takes 2 hours of direct labor to produce a single wall hanging. Hassock’s standard labor cost is $14 per hour. During August, Hassock produced 17,000 units and used 34,200 hours of direct labor at a total cost of $478,200. What is Hassock’s labor efficiency variance for August?
Multiple Choice
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$2,800 favorable.
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$2,200 unfavorable.
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$3,400 unfavorable.
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$1,200 favorable.
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$2,800 unfavorable.
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