Reference no: EM13790655
Chair Inc. manufactures chairs. The company uses standard costing and has developed the following information about standards for its product:
Materials: 10 pounds per unit; $15 per yard
Labor: 2 DL hour per unit; $16 per hour
During October, the company experienced an unanticipated drop in demand and decreased production. Although planned production was for 6,000 units, the company actually produced 5,000 units. In anticipation of the original production volume, 60,000 yards were purchased, at a total cost of $870,000.
During the month, 57,000 yards of material were used, and 11,000 direct labor hours were worked. Direct labor cost for the month totaled $173,800.
Compute 1) the direct labor rate variance and 2) the direct labor efficiency variance. Specify if each is favorable or unfavorable.
(HELP: ignore any references to material since this problem only asks for LABOR variances.)
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: Chair Inc. manufactures chairs. The company uses standard costing and has developed the following information about standards for its product: Compute 1) the direct labor rate variance and 2) the direct labor efficiency variance. Specify if each is f..
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