What is the usage variance

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Reference no: EM131821428

Problem

Milton Company uses a standard cost system.

• Standards call for 2 direct labor hours per widget. The standard labor rate is $10 per hour.
• Four pounds of material are needed for each widget at a standard cost of $2.25 per pound.

Milton actually produces 17,000 widgets during the year.

• Direct labor costs are $359,100 for 34,200 hours.
• Milton purchased and used 70,000 pounds of materials at $2.50 per pound.

For direct labor, what is the efficiency (usage) variance? Answers are labeled as favorable (F) or unfavorable (U).

Reference no: EM131821428

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