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I- Runy Company produces a single product. Variable manufacturing overhead is applied to products on...

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Accounting

I- Runy Company produces a single product. Variable manufacturing overhead is applied to products on the basis of direct labor-hours. Runy Company was planning to produce 5,500 units. The standard costs for one unit of product are as follows:

Direct material: 0.5 Kgs at $5 per kg

$ 2.5

Direct labor: 0.3 hours at $30.00 per hour

$ 9.00

During June, 5,000 units were actually produced. The actual costs associated with Junes operations were as follows:

Material purchased: 2,100 Kgs at $6 per Kg

$12,600

Direct labor: 1,400 hours at $31 per hour

$43,400

1. According to the standards, what direct labor cost should have been incurred to prepare 5,500 meals? How much does this differ from the actual direct labor cost? (1pt)

Break down the difference computed above into a labor rate(spending) variance and a labor efficiency (activity) variance. (1pt)

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