Midgley Corporation makes a product whose direct labor standards are 0.8 hours per unit and $22.00 per hour. In April the company produced 6,900 units using 5,250 direct labor-hours. The actual direct labor cost was $113,925. The labor efficiency variance for April is:
A)$5,940 U
B)$5,940 F
C)$5,859 F
D)$5,859 U

Question

Quizplus · Accepted Answer

The labor efficiency variance is calculated as (Actual Hours - Standard Hours) x Standard Rate. Standard Hours = 6,900 units x 0.8 hours/unit = 5,520 hours. Variance = (5,250 - 5,520) x $22 = -270 x $22 = $5,940 F (Favorable).

Midgley Corporation Makes a Product Whose Direct Labor Standards Are