Computing labour efficiency variance


Q1) Standard costs and actual costs for direct labor, direct materials, and factory overhead for manufacture of 2,500 units of product are given below:

Standard Costs @ 2,500 units:

 

Direct materials

2,500 kilograms @ $8/kg

Direct labor

7,500 hours @ $12/hr

Actual Costs @ 2,500 units:

 

Direct materials

2,600 kilograms @ $8.75

Direct labor

7,400 hours @ $11.40

 Labour efficiency (quantity) variance is:

i) $5,640 favourable

ii) $4,500 favourable

iii) $4,440 favourable

iv) $1,200 favourable

v) $1,140 favourable

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Accounting Basics: Computing labour efficiency variance
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