Question

Denver Co. recently used 14,000 labor hours to produce 7,500 units. According to manufacturing specifications, each unit is anticipated to take two hours to complete. The company's actual payroll costs were $158,200. If the standard labor cost per hour is $11, Denver's labor efficiency variance is: Question 18 options: $11,300 (U). $11,000 (U). $11,000 (F). $11,300 (F).

Answer 1

Answer:

Direct labor time (efficiency) variance= $11,000 favorable

Explanation:

Giving the following information:

Denver Co. recently used 14,000 labor hours to produce 7,500 units. According to manufacturing specifications, each unit is anticipated to take two hours to complete. The standard labor cost per hour is $11.

To calculate the direct labor efficiency variance, we need to use the following formula:

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

Direct labor time (efficiency) variance= (2*7,500 - 14,000)*11

Direct labor time (efficiency) variance= $11,000 favorable