Question

A company's standard costs for direct labor are as follows: Direct Labor Standard Quantity Standard Price 1 hour per unit $15 per hour Last month, the company produced and sold 100 units of its product, using 110 direct labor hours at a rate of $16 per hour. What amount is the company's direct labor efficiency variance for last month?

Answer 1

Unfavorable variable direct labor efficiency variance = $150

Step-by-step explanation:

To determine the variable direct labor efficiency variance, we will use the following formula:

Variance = (standard hours – actual hours) x standard rate = (100 hours – 110 hours) x $15 per hour

Variance = 10 hours x $15 per hour = -$150

The variable direct labor efficiency variance measures the difference between the standard cost of direct labor hours actually used during a period and the standard number of hours of direct labor that the output level should have required.