Question

TaskMaster Enterprises employs a standard cost system in which direct materials inventory is carried at standard cost. TaskMaster has established the following standards for the prime costs of one unit of product.

	Standard					Standard			Standard
	Quantity					Price			Cost
Direct Materials		8	pounds			$	1.50	per pound		$	12.00
Direct Labor		0.25	hour			$	6.20	per hour			1.55
										$	13.55

During November, TaskMaster purchased 184,000 pounds of direct materials at a total cost of $331,200. The total factory wages for November were $38,000, 90% of which were for direct labor. TaskMaster manufactured 22,000 units of product during November using 162,000 pounds of direct materials and 6,000 direct labor hours.

What is the direct labor efficiency variance for November?

Multiple Choice

• $3,100

• $2,839

• $3,200

• $2,750

Answer 1

Standard rate = $6.20 per hour

Standard time = 0.25 hour per unit

Actual output = 22,000 units

Actual time = 6,000 hours

Hence, standard time for actual output = Standard time per unit x Actual output

= 0.25 x 22,000

= 5,500

Direct labor efficiency variance = Standard rate x (Standard time - Actual time)

= 6.20 x (5,500 - 6,000)

= $3,100 (Unfavorable)

First option is correct

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