Pikus Corporation makes a product that has the following direct labor standards: In January the company's budgeted production was 3,400 units, but the actual production was 3,500 units. The company used 640 direct labor-hours to produce this output. The actual direct labor cost was $8,960.
-The labor efficiency variance for January is:
A)$840 U
B)$900 U
C)$840 F
D)$900 F

Question

Pikus Corporation makes a product that has the following direct labor standards:  In January the company's budgeted production was 3,400 units, but the actual production was 3,500 units. The company used 640 direct labor-hours to produce this output. The actual direct labor cost was $8,960.
-The labor efficiency variance for January is:
A)$840 U 
B)$900 U 
C)$840 F 
D)$900 F

Quizplus · Accepted Answer

SH = 3,500 units F1F1F1S1F1F1F10 0.2 hours per unit = 700 hours
Labor efficiency variance = (AH - SH)SR
= (640 hours - 700 hours)$15.00 per hour
= (-60 hours)$15.00 per hour = $900 F

Pikus Corporation Makes a Product That Has the Following Direct