Galla Corporation makes a product with the following standard costs: The company budgeted for production of 2,400 units in June,but actual production was 2,500 units.The company used 19,850 pounds of direct material and 980 direct labor-hours to produce this output.The company purchased 21,700 pounds of the direct material at $6.70 per pound.The actual direct labor rate was $19.20 per hour and the actual variable overhead rate was $1.80 per hour. 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 June is:

Question

Galla Corporation makes a product with the following standard costs:  The company budgeted for production of 2,400 units in June,but actual production was 2,500 units.The company used 19,850 pounds of direct material and 980 direct labor-hours to produce this output.The company purchased 21,700 pounds of the direct material at $6.70 per pound.The actual direct labor rate was $19.20 per hour and the actual variable overhead rate was $1.80 per hour. 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 June is:

Quizplus · Accepted Answer

SH = 2,500 units × 0.4 hour per unit = 1,000 hours
Labor efficiency variance = (AH - SH)× SR
= (980 hours - 1,000 hours)× $20 per hour
= (-20 hours)× $20 per hour
= $400 F

Galla Corporation Makes a Product with the Following Standard Costs