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Minji Corporation makes a product with direct labor standards of 0.80 hours per unit and $22.00 per hour. In April, the company produced 6,900 units using 5,250 direct labor-hours. The actual direct labor cost was $113,925.

What is the labor efficiency variance for April?

A. $5,940 U

Answer :

Final answer:

The labor efficiency variance for April is $5,940 U.

Explanation:

The labor efficiency variance for April can be calculated by subtracting the actual labor hours used from the standard labor hours allowed, and then multiplying the difference by the standard labor rate. In this case, the standard labor hours allowed is 0.80 hours per unit, and the actual labor hours used is 5,250 hours. The standard labor rate is $22.00 per hour.

Labor efficiency variance = (Standard labor hours allowed - Actual labor hours used) x Standard labor rate

Labor efficiency variance = (0.80 hours per unit x 6,900 units - 5,250 hours) x $22.00 per hour

Labor efficiency variance = (5,520 hours - 5,250 hours) x $22.00 per hour

Labor efficiency variance = 270 hours x $22.00 per hour

Labor efficiency variance = $5,940 U

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