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TB MC Qu. 10-179 (Static) A product's standard cost card specifies that a unit ... A product's standard cost card specifies that a unit of the product requires 4 direct labor-hours. During September, 3,350 units were made, which was 150 units less than budgeted. The total budgeted direct labor cost for September was $117,600. The direct labor cost incurred during September was $111,850 and 13,450 direct labor-hours were worked. The labor efficiency variance for the month was:

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Answer:

See below

Explanation:

Given that;

Standard direct labor hours required = 4

Actual units made = 3,350

Budgeted units = 3,350 + 150 = 3,500

Budgeted direct labor cost = $117,600

Direct labor cost incurred = $111,850

Direct labor hours worked = $13,450

Labor efficiency variance = (Actual hours - Standard hours) × Standard rate

Standard rate = Budgeted direct labor cost ÷ (Direct labor hours required × Budgeted unit)

= $117,600 ÷ (4 × 3,500)

= $8.4

Hence,

Labor efficiency variance = [($13,450 - (4 × 3,350)] × $8.4

= $420 Favorable