Majer Corporation makes a product with the following standard costs: Standard Quantity or HoursStandard Price or RateStandard Cost Per UnitDirect materials6.4ounces$ 3.00per ounce$ 19.20Direct labor0.4hours$ 13.00per hour$ 5.20Variable overhead0.4hours$ 5.00per hour$ 2.00 The company reported the following results concerning this product in February. Originally budgeted output4,800unitsActual output4,900unitsRaw materials used in production30,230ouncesActual direct labor-hours1,910hoursPurchases of raw materials32,600ouncesActual price of raw materials$ 2.90per ounceActual direct labor rate$ 12.40per hourActual variable overhead rate$ 4.90per hour 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 February is: Multiple Choice A. $650 U B. $650 F C. $620 F D. $620 U

Labour efficiency variance measures the difference between the actual hours worked and the standard hours expected for the actual level of productionIt reflects how efficiently labor resources are utilized in comparison to the predetermined standards. A positive variance suggests better-than-expected efficiency, while a negative variance indicates lower efficiency than anticipated. Working Standard Hours = 1960 hrs (4900 × 0.4)Actual hours = 1910 hrs Standard Direct labor rate = $13Labor efficiency variance = ( 1960 - $1910 ) × $13 = $650 Favorable Labour efficiency variance = . (Standard hours - Actual hours) × standard Direct labor rate Labor efficiency variance = = $650 Favorable Correct option is = B = $650 F Thanks Hope you understand

Answered: Majer Corporation makes a product with…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Majer Corporation makes a product with the following standard costs:

	Standard Quantity or Hours	Standard Price or Rate	Standard Cost Per Unit
Direct materials	6.4	ounces	$ 3.00	per ounce	$ 19.20
Direct labor	0.4	hours	$ 13.00	per hour	$ 5.20
Variable overhead	0.4	hours	$ 5.00	per hour	$ 2.00

The company reported the following results concerning this product in February.

Originally budgeted output	4,800	units
Actual output	4,900	units
Raw materials used in production	30,230	ounces
Actual direct labor-hours	1,910	hours
Purchases of raw materials	32,600	ounces
Actual price of raw materials	$ 2.90	per ounce
Actual direct labor rate	$ 12.40	per hour
Actual variable overhead rate	$ 4.90	per hour

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 February is:

Multiple Choice

A. $650 U

B. $650 F

C. $620 F

D. $620 U

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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