Milar Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate
Direct materials 7.7 pounds $ 4.00 per pound
Direct labor 0.1 hours $ 20.00 per hour
Variable overhead 0.1 hours $ 4.00 per hour


In January the company produced 2,000 units using 16,060 pounds of the direct material and 210 direct labor-hours. During the month, the company purchased 16,900 pounds of the direct material at a cost of $65,910. The actual direct labor cost was $4,473 and the actual variable overhead cost was $756.

The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.

The labor efficiency variance for January is:
$200 U
$200 F
$213 U
$213 F

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