Question

Use the following data to find the direct labor efficiency variance if the company produced 3,500 units during the period.Direct labor standard (4 hrs. @ $7.10/hr.) $28.40 per unitActual hours worked 12,150Actual rate per hour $7.50a. $4,860 unfavorable.b. $5,600 unfavorable.c. $5,600 favorable.d. $13,135 favorable.e. $4,860 favorable.

Answer 1

Answer: Option (d) is correct.

Explanation:

Given that,

Company produced = 3,500 units

Direct labor standard (4 hrs. at $7.10/hr) = $28.40 per unit

Actual hours worked = 12,150

Actual rate per hour = $7.50

bud rate = $7.10/hr

Direct labor efficiency =  (Actual Hours- Standard Hours) × bud rate

                                     = (12,150 - (3,500 × 4)) × 7.1

                                     =  $13135 Favorable