Madrid Co. has a direct labor standard of 4 hours per unit of output. Each employee has a standard wage rate of $11.50 per hour. During February, Madrid Co. paid $100,000 to employees for 9,240 hours worked. 2,480 units were produced during February. What is the direct labor efficiency variance? Multiple Choice $14,080 favorable $5,412 favorable $7,820 favorable $6,260 favorable
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.
Madrid Co. has a direct labor standard of 4 hours per unit of output. Each employee has a standard wage rate of $11.50 per hour. During February, Madrid Co. paid $100,000 to employees for 9,240 hours worked. 2,480 units were produced during February. What is the direct labor efficiency variance?
Multiple Choice
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$14,080 favorable
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$5,412 favorable
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$7,820 favorable
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$6,260 favorable
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