Taylor Enterprises purchased 56,000 pounds (cost= $420,000) of direct material to be used in the manufacture of the company's sole product. According the production specifications, each completed unit requires five pounds of direct material at a standard cost of $7.80 per pound. Direct materials consumed by the end of the period totaled 53,500 pounds in the manufacture of 10,900 finished units.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Taylor Enterprises purchased 56,000
pounds (cost= $420,000) of direct
material to be used in the manufacture
of the company's sole product.
According the production specifications,
each completed unit requires five
pounds of direct material at a standard
cost of $7.80 per pound. Direct materials
consumed by the end of the period
totaled 53,500 pounds in the
manufacture of 10,900 finished units.
An examination of Taylor's payroll
records revealed that the company
worked 22,000 labor hours (cost=
$319,000) during the period, and
specifications called for each completed
unit requiring two hours of labor at a
standard cost of $14.80 per hour.
Assume that the company computes
variances at the earliest point in time.
Taylor's direct-labor efficiency variance
was:
A. $2,900F
B. $2,900U
C. $2,960F
D. $2,960U
E. None of the answers are correct.
Transcribed Image Text:Taylor Enterprises purchased 56,000 pounds (cost= $420,000) of direct material to be used in the manufacture of the company's sole product. According the production specifications, each completed unit requires five pounds of direct material at a standard cost of $7.80 per pound. Direct materials consumed by the end of the period totaled 53,500 pounds in the manufacture of 10,900 finished units. An examination of Taylor's payroll records revealed that the company worked 22,000 labor hours (cost= $319,000) during the period, and specifications called for each completed unit requiring two hours of labor at a standard cost of $14.80 per hour. Assume that the company computes variances at the earliest point in time. Taylor's direct-labor efficiency variance was: A. $2,900F B. $2,900U C. $2,960F D. $2,960U E. None of the answers are correct.
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