Question

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

Actual direct labor hours used 34,000
Actual rate per hour $17.00
Standart rate per hour $16.75
Standard hours for units produced 33,500

How much is the direct labor efficiency variance?

a. $8,500 unfavorable
b. $8,375 favorable
c. $8,375 unfavorable
d. $8,500 favorable

Answer 1

Answer:

Direct labor time (efficiency) variance= $8,375 unfavorable

Explanation:

Giving the following information:

Actual direct labor hours used 34,000

Standart rate per hour $16.75

Standard hours for units produced 33,500

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= (33,500 - 34,000)*16.75

Direct labor time (efficiency) variance= $8,375 unfavorable