Question

relevant information for direct labor is as follows: actual units made 500; actual hours worked 840, actual wage rate $15.25, standard hours allowed per unit 1.64, standard wage rate $15.50. what was the direct labor efficiency variance?

Answer 1

The direct labor efficiency variance is computed as the difference in hours between the standard and actual hours worked, multiplied by the standard wage rate, resulting in an unfavorable variance of $310.

Step-by-step explanation:

The direct labor efficiency variance for the production scenario provided is calculated by finding the difference between the standard hours allowed for the actual output and the actual hours worked, multiplied by the standard wage rate.

First, the standard hours for the actual output are computed as (actual units made) × (standard hours allowed per unit), which is 500 × 1.64 = 820 standard hours. Then, compare the standard hours to the actual hours worked, which are 840 hours. The difference is 840 - 820 = 20 hours. The direct labor efficiency variance is then calculated by taking the difference in hours (20) and multiplying it by the standard wage rate of $15.50, resulting in a variance of 20 × $15.50 = $310. Since the actual hours are greater than the standard hours, this is an unfavorable variance.