Question

Liukko Corporation's standard wage rate is $14.90 per direct labor-hour (DLH) and according to the standards, each unit of output requires 2.8 DLHs. In June, 1,800 units were produced, the actual wage rate was $15.80 per DLH, and the actual hours were 5,110 DLHs. The Labor Efficiency Variance for June would be recorded as a:__________.
a. credit of $1,043.
b. debit of $1,043.
c. credit of $1,106.
d. debit of $1,106.

Answer 1

Answer:

Direct labor time (efficiency) variance= $1,043 unfavorable

Direct labor time (efficiency) variance= $1,043 debit

Explanation:

Giving the following information:

The standard wage rate is $14.90 per direct labor-hour (DLH)

Each unit of output requires 2.8 DLHs.

In June, 1,800 units were produced, the actual wage rate was $15.80 per DLH, and the actual hours were 5,110 DLHs

First, we need to calculate the direct labor efficiency variance:

Direct labor time (efficiency) variance= (Standard Quantity - Actual Quantity)*standard rate

Direct labor time (efficiency) variance= (2.8*1,800 - 5,110)*14.9

Direct labor time (efficiency) variance= $1,043 unfavorable