Tidd Corporation makes a product with the following standard costs: The company reported the following results concerning this product in November. 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 November is:
A)$10,720 U
B)$10,720 F
C)$10,653 U
D)$10,653 F

Question

Tidd Corporation makes a product with the following standard costs:  The company reported the following results concerning this product in November.  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 November is:
A)$10,720 U 
B)$10,720 F 
C)$10,653 U 
D)$10,653 F

Quizplus · Accepted Answer

SH = 9,000 units F1F1F1S1F1F1F10 0.8 hour per unit = 7,200 hours
Labor efficiency variance = (AH - SH)SR
= (7,870 hours - 7,200 hours)$16 per hour
= (670 hours)$16 per hour = $10,720 U

Tidd Corporation Makes a Product with the Following Standard Costs