Trendy T's Corporation manufactures t - shirts, which is its only product. The standards for t - shirts are as follows: Standard direct labor cost per hour Standard direct labor hours per t-shirt $19.00 0.4 During the month of January, the company produced 1,400 t - shirts. Related production data for the month follows: Actual direct labor hours Actual direct labor cost incurred 680 $10,880 What is the direct labor eficiency variance for the month? O A. $2,040 unfavorable B. $2,040 favorable O C. $2,280 favorable O D. $2,280 unfavorable

Question

Aaron Donovan

Business

3 February, 20:05

Trendy T's Corporation manufactures t - shirts, which is its only product. The standards for t - shirts are as follows: Standard direct labor cost per hour Standard direct labor hours per t-shirt $19.00 0.4 During the month of January, the company produced 1,400 t - shirts. Related production data for the month follows: Actual direct labor hours Actual direct labor cost incurred 680 $10,880 What is the direct labor eficiency variance for the month? O A. $2,040 unfavorable B. $2,040 favorable O C. $2,280 favorable O D. $2,280 unfavorable

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Answers (1)

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Pearl · Answer 1

Option (D) is correct.

Explanation:

Given that,

Standard direct labor cost per hour, SR = $19 per hour

Standard direct labor hours per t-shirt = 0.4 hours

Actual direct labor hours, AH = 680

Actual output = 1,400 t-shirts

Standard hours for actual output, SH:

= Standard direct labor hours per t-shirt * T-shirts produced

= 0.4 hours * 1,400

= 560

Therefore,

Direct labor efficiency variance for the month:

= (SH - AH) * SR

= (560 - 680) * $19

= $2,280 Unfavorable