Question

Cybernet systems is a start-up company that makes connectors for high-speed internet connections. cybernet systems has budgeted three hours of direct labor per connector, at a standard cost of $25 per hour. during august, technicians actually worked 192 hours completing 76 connectors. all 76 connectors actually produced were sold. cybernet systems paid the technicians $25.70 per hour. what is cybernet systems' direct labor efficiency variance for august?

Answer 1

The direct labor efficiency variance measures the difference between the actual hours of labor used and the standard hours of labor allowed for production. For Cybernet Systems in August, the direct labor efficiency variance is $765.60.

Step-by-step explanation:

The direct labor efficiency variance measures the difference between the actual hours of labor used and the standard hours of labor allowed for the production of a certain number of units. To calculate the direct labor efficiency variance, we need to determine the standard hours of labor per unit and then compare it to the actual hours of labor used.

In this case, the standard hours of labor per connector is 3 hours, so the standard labor cost per connector is $75 (3 hours x $25 per hour). The actual hours of labor used were 192 hours to produce 76 connectors. Therefore, the standard labor cost for the actual production should have been $5,700 (76 connectors x $75 per connector).

The actual labor cost paid by Cybernet Systems was $4,934.40 (192 hours x $25.70 per hour). To calculate the direct labor efficiency variance, we subtract the standard labor cost from the actual labor cost: $5,700 - $4,934.40 = $765.60. Therefore, Cybernet Systems' direct labor efficiency variance for August is $765.60.