Question

Benson Company manufactures special metallic materials for luxury homes that require highly skilled labor. Benson uses standard costs to prepare its flexible budget. For the first quarter of the year, direct materials and direct labor standards for one of their popular products were as follows: Direct materials: 2 pounds per unit; $4 per pound Direct labor: 5 hours per unit; $14 per hour Benson produced 5,000 units during the quarter. At the end of the quarter, an examination of the labor costs records showed that the company used 30,000 direct labor hours and actual total direct labor costs were $225,000. What is the direct labor efficiency variance?A. $70,000 F 0 B. $70,000 U O C. $125,000 F O D. $125,000 U

Answer 1

The correct answer is B.

Step-by-step explanation:

Giving the following information:

For the first quarter of the year, direct labor standards for one of their popular products were as follows:

Direct labor: 5 hours per unit; $14 per hour

Benson produced 5,000 units during the quarter.

At the end of the quarter, an examination of the labor costs records showed that the company used 30,000 direct labor hours and actual total direct labor costs were $225,000.

Direct labor efficiency variance= (SQ - AQ)*standard rate

Direct labor efficiency variance= (25,000 - 30,000)*14= $70,000 unfavorable