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Important information about Labor Efficiency Variance
The following data pertain to Nell Company's operations for June:
Standard quantity of materials per unit of product 5 poundsStandard cost of materials per pound $0.20Standard direct labor hours 0.04 hoursStandard wage rate per hour $7.00Actual output 100,000 unitsMaterials purchased 100,000 poundsActual cost of materials purchased per pound $0.17Materials used 60,000 poundsActual direct labor hours required 3,900 hoursActual direct labor cost per hour $7.20
The materials price variance is recognized when materials are purchased.Reference: 10-5
Nell's labor efficiency variance for June was:
$780 unfavorable$700 favorable$780 favorable$700 unfavorable
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