Figure 4 Shannon Ltd.'s Standard Cost Card Contained the Following Information

question 28

Multiple Choice

Figure 4
Shannon Ltd.'s standard cost card contained the following information:
Direct labour: 1.25 hours x £8.00 per hour = £10.00
Shannon planned to make 12,000 units. Shannon actually made 10,000 units using 13,000 hours.
-Refer to Figure 4. Shannon's labour efficiency variance was

• A) £4,625 unfavorable
• B) £4,000 unfavorable
• C) £27,750 unfavorable
• D) £24,000 unfavorable

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Definitions:

Variable Manufacturing Overhead

comprises manufacturing costs that vary directly with the level of production, such as materials and labor.

Direct Labor-hours

The all-encompassing total of work hours by staff directly partaking in manufacturing roles.

Variable Overhead Efficiency Variance

The difference between the actual variable overhead incurred and the standard cost based on the actual level of activity output.

Variable Overhead

Costs that vary with the level of production or sales volume, such as raw materials and labor directly involved in production.