Ortman Corporation makes a product with the following standard costs: The company reported the following results concerning this product in May. 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 May is:

Question

Ortman Corporation makes a product with the following standard costs:  The company reported the following results concerning this product in May.  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 May is:

Quizplus · Accepted Answer

SH = 1,600 units × 0.7 hours per unit = 1,120 hours
Labor efficiency variance = (AH - SH)× SR
= (1,090 hours − 1,120 hours)× $17.00 per hour
= (−30 hours)× $17.00 per hour
= $510 F

Ortman Corporation Makes a Product with the Following Standard Costs