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Managerial Accounting

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Moderate

Computing Variances

MGRACT-LX14HS

GT Iron Works produces a high-tech cattle prod, with engineering standards of 15 hours of direct labor at \$12.50 per hour to complete each unit. The company produced 1200 units and had actual labor costs of \$235,000 for December. In reviewing the time sheets, the company tallied 18,250 direct labor hours.

The Labor Efficiency Variance for the month of December is:

A

$3,125 Unfavorable

B

$3,125 Favorable

C

$6,875 Favorable

D

$6,875 Unfavorable