Tractor Corporation produces toy tractors. The company uses the following direct cost categories: Category Standard Inputs for 1 output Std....

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Accounting

Tractor Corporation produces toy tractors. The company uses thefollowing direct cost categories:
Category Standard Inputs
for 1 output Std. Cost
per input
Direct Materials 4.00 $12.50
Direct Labour 1.40 9.50
Direct Marketing 0.54 5.50
Actual performance and budgeted performance for the company isshown below:

Actual output: (in units) 5,000

Direct Materials:
Materials costs $299,000
Input purchased and used 23,000
Actual price per input $13.00

Direct Manufacturing Labour:
Labour costs $ 95,000
Labour-hours of input 9,500
Actual price per hour $10.00
Direct Marketing Labour:
Labour costs $ 40,000
Labour-hours of input 5,000
Actual price per hour $ 8.00

Question: What are the efficiency variances for directmanufacturing labour and directmarketing labour,respectively?
a) $23,750 unfavourable; $12,650 favourable
b) $38,375 unfavourable; $7,350 favourable
c) $23,750 unfavourable; $12,650 unfavourable
d) $23,750 favourable; $12,650 unfavourable
e) $25,898 unfavourable; $15,133 unfavourable

Answer & Explanation Solved by verified expert

3.8 Ratings (714 Votes)

Solution Answer is c 23750 unfavorable 12650 unfavorable Working Notes Manufacturing Direct Labor efficiency variance Actual hour x Standard rate standard hour x Standard rate 9500 See Answer

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Category	Standard Inputs for 1 output	Std. Cost per input
Direct Materials	4.00	$12.50
Direct Labour	1.40	9.50
Direct Marketing	0.54	5.50

Materials costs	$299,000
Input purchased and used	23,000
Actual price per input	$13.00

Labour costs	$ 95,000
Labour-hours of input	9,500
Actual price per hour	$10.00

Labour costs	$ 40,000
Labour-hours of input	5,000
Actual price per hour	$ 8.00

		a) $23,750 unfavourable; $12,650 favourable
		b) $38,375 unfavourable; $7,350 favourable
		c) $23,750 unfavourable; $12,650 unfavourable
		d) $23,750 favourable; $12,650 unfavourable
		e) $25,898 unfavourable; $15,133 unfavourable