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Tharaldson Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 5.7
Tharaldson Corporation makes a product with the following standard costs:
Standard Quantity or Hours | Standard Price or Rate | Standard Cost Per Unit | |||||||
Direct materials | 5.7 | ounces | $ | 2.00 | per ounce | $ | 11.40 | ||
Direct labor | 0.2 | hours | $ | 11.00 | per hour | $ | 2.20 | ||
Variable overhead | 0.2 | hours | $ | 6.00 | per hour | $ | 1.20 | ||
The company reported the following results concerning this product in June.
Originally budgeted output | 3,900 | units | |
Actual output | 3,500 | units | |
Raw materials used in production | 20,700 | ounces | |
Purchases of raw materials | 21,800 | ounces | |
Actual direct labor-hours | 530 | hours | |
Actual cost of raw materials purchases | $ | 42,600 | |
Actual direct labor cost | $ | 13,900 | |
Actual variable overhead cost | $ | 3,950 | |
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:
A. 1,870 F
B. 2,750 U
C. 2,750 F
D. 1,870 U
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