Assume Martin Guitar Company has a standard of 3 hours of direct labor per unit produced and $20 per hour for the labor rate. During last period, the company used 24,000 hours of direct labor at a $456,000 total cost to produce 6,000 units. Compute the direct labor rate and efficiency variances.
A) Rate Variance: $24,000 unfavorable; Efficiency Variance: $120,000 favorable.
B) Rate Variance: $24,000 favorable; Efficiency Variance: $120,000 unfavorable.
C) Rate Variance: $96,000 favorable; Efficiency Variance: $96,000 unfavorable.
D) Rate Variance: $120,000 favorable; Efficiency Variance: $24,000 unfavorable.
E) Rate Variance: $120,000 unfavorable; Efficiency Variance: $24,000 unfavorable.
Correct Answer:
Verified
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