Question
ou have started working as a cost accountant for a firm that has only been in business for one month. The firm is able to
ou have started working as a cost accountant for a firm that has only been in business for one month. The firm is able to buy a new type of biodegradable plastic at a fixed price of $100 per roll. The plastic is then cut and sealed to make garbage bags. Fixed factory overhead is estimated to be $125,000 per month. During this past month, 8,000 cartons of garbage bags were produced, which represents 80% of the activity volume. You are given the following information:
Rolls of plastic used | 40 | ||||
Variable overhead incurred | $61,000 | ||||
Overhead efficiency variance | $5,000 | U | |||
Standard costs per carton of garbage bags: | |||||
Labour hours | 2 | ||||
Wage rate | $8 | per hour | |||
Total overhead | $20 | ||||
Rolls of plastic | 0.004 | rolls |
Calculate the following:
Labour efficiency variance $_______________ (also favourable, unfavourable or neither)
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