Question

The following information describes a company's usage of direct labor in a recent period. The direct labor efficiency variance is:

Actual hours used 45,000
Actual rate per hour $15.00
Standard rate per hour $14.50
Standard hours for units produced 47,000

a. $29,000 unfavorable.
b. $29,000 favorable.
c. $22,500 unfavorable.
d. $52,500 favorable.
e. $52,500 unfavorable.

Answer 1

Answer:

Option (B) is correct.

Explanation:

Given that,

Actual hours used = 45,000

Actual rate per hour = $15.00

Standard rate per hour = $14.50

Standard hours for units produced = 47,000

Direct Labor Efficiency Variance:

= (Standard Hours for units produced - Actual Hours used) × Standard Rate  per hour

= (47,000 - 45,000) × 14.50

= 29,000 Favorable