Hardigree Corporation makes a product that has the following direct labor standards: In May the company's budgeted production was 8,900 units, but the actual production was 8,800 units. The company used 2,820 direct labor-hours to produce this output. The actual direct labor cost was $70,218.
The labor efficiency variance for May is:
A) $4,482 U
B) $4,482 F
C) $4,140 U
D) $4,140 F

Question

Hardigree Corporation makes a product that has the following direct labor standards:  In May the company's budgeted production was 8,900 units, but the actual production was 8,800 units. The company used 2,820 direct labor-hours to produce this output. The actual direct labor cost was $70,218.
The labor efficiency variance for May is:
A) $4,482 U 
B) $4,482 F 
C) $4,140 U 
D) $4,140 F

Quizplus · Accepted Answer

SH = 8,800 units × 0.3 hours per unit = 2,640 hours
Labor efficiency variance = (AH × SR) − (SH × SR)
= (2,820 hours × $23.00 per hour) − (2,640 hours × $23.00 per hour)
= $64,860 − $60,720
= $4,140 U

Hardigree Corporation Makes a Product That Has the Following Direct