Snuggs Corporation makes a product with the following standard costs: The company reported the following results concerning this product in October. 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 October is:
A)$510 U
B)$480 F
C)$480 U
D)$510 F

Question

Snuggs Corporation makes a product with the following standard costs:  The company reported the following results concerning this product in October.  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 October is:
A)$510 U 
B)$480 F 
C)$480 U 
D)$510 F

Quizplus · Accepted Answer

SH = 1,100 units F1F1F1S1F1F1F10 0.3 hours per unit = 330 hours
Labor efficiency variance = (AH - SH)SR
= (350 hours - 330 hours)$24.00 per hour
= (20 hours)$24.00 per hour = $480 U

Snuggs Corporation Makes a Product with the Following Standard Costs