Question

Bailey’s standard labor cost of producing one unit of Product DD is 1.5 hours at a rate of $11.3 per hour. During August, 1,510 hours were incurred at a cost of $12.1 per hour to produce 1,288 units of Product DD.

Bailey’s direct labor efficiency variance is $__________

Answer 1

Bailey's direct labor efficiency variance is calculated by comparing the standard labor hours for actual production to the actual labor hours worked.

The variance is found to be $4,768.6, indicating that Bailey was more efficient than the standard.

Step-by-step explanation:

The question asks to calculate the direct labor efficiency variance, which shows the difference between the standard labor cost for actual production and the actual labor cost incurred.

To find the labor efficiency variance, we need to follow these steps:

Calculate the standard labor hours for actual production: 1,288 units × 1.5 hours/unit = 1,932 hours.

Calculate the actual labor hours worked: 1,510 hours.

Calculate the difference between the standard hours and the actual hours:

1,932 hours - 1,510 hours

= 422 hours.

Finally, calculate the labor efficiency variance by multiplying the difference in hours by the standard rate:

422 hours × $11.3/hour

= $4,768.6.

Therefore, Bailey’s direct labor efficiency variance is $4,768.6.