Question

Budgeted Actual Sales volume 100 units 110 units Sales price $50 per unit $55 per unit Unit VC $30 per unit $33 per unit Input price for DL $10 per hour $12 per hour Input quantity per unit for DL 1.5 hours per unit 2 hours per unit Compute input efficiency variance for DL Group of answer choices $100 favorable $550 favorable $550 unfavorable 0.5 hours unfavorable $100 unfavorable

Answer 1

The input efficiency variance for direct labor is calculated by comparing the actual hours of labor used against the standard hours allowed, resulting in a $550 unfavorable variance due to higher labor hours than the standard for the actual production.

Step-by-step explanation:

The question asks for the computation of the input efficiency variance for direct labor (DL). The input efficiency variance is found by looking at the difference between the actual quantity of labor used and the standard quantity allowed for the actual production, multiplied by the standard cost per hour for labor.

First, calculate the standard quantity allowed for actual production: 110 units (actual production) × 1.5 hours per unit (standard quantity) = 165 standard hours. Then, compute the actual quantity of labor used: 110 units × 2 hours per unit = 220 hours. Now, find the difference between the standard and the actual hours: 220 hours (actual) - 165 hours (standard) = 55 hours. This difference is unfavorable because more hours were used than the standard. Multiply the difference by the standard cost per hour for labor: 55 hours × $10 per hour = $550 unfavorable variance.

Answer 2

Direct labor time (efficiency) variance= $550 unfavorable

Step-by-step explanation:

Giving the following formula:

DL $10 per hour $12 per hour

Input quantity per unit for DL 1.5 hours per unit 2 hours per unit

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= (110*1.5 - 110*2)*10

Direct labor time (efficiency) variance= $550 unfavorable