Majer Corporation makes a product with the following standard costs: The company reported the following results concerning this product in February.
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:
A) $650 U
B) $650 F
C) $620 F
D) $620 U

Question

Majer Corporation makes a product with the following standard costs:  The company reported the following results concerning this product in February.
 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:
A) $650 U 
B) $650 F 
C) $620 F 
D) $620 U

Quizplus · Accepted Answer

SH = 4,900 units × 0.4 hours per unit = 1,960 hours
Labor efficiency variance = (AH − SH) × SR)
= (1,910 hours − 1,960 hours) × $13.00 per hour
= (−50 hours) × $13.00 per hour
= $650 F

Majer Corporation Makes a Product with the Following Standard Costs