Epley Corporation makes a product with the following standard costs: In July the company produced 3, 300 units using 12, 240 pounds of the direct material and 2, 760 direct labor-hours.During the month, the company purchased 13, 000 pounds of the direct material at a cost of $35, 100.The actual direct labor cost was $51, 612 and the actual variable overhead cost was $20, 148. 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 July is:

Question

Epley Corporation makes a product with the following standard costs:  In July the company produced 3, 300 units using 12, 240 pounds of the direct material and 2, 760 direct labor-hours.During the month, the company purchased 13, 000 pounds of the direct material at a cost of $35, 100.The actual direct labor cost was $51, 612 and the actual variable overhead cost was $20, 148. 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 July is:

Quizplus · Accepted Answer

SH = 3, 300 units × 0.8 hours per unit = 2, 640 hours
Labor efficiency variance = (AH - SH)× SR
= (2, 760 hours - 2, 640 hours)× $19.00 per hour
= (120 hours)× $19.00 per hour
= $2, 280 U

Epley Corporation Makes a Product with the Following Standard Costs