Question

Dreary Credit Agency processes credit applications. The labor standard at Dreary is $15 per hour, 8 hours per day (per employee). During the last pay period (10 business days), Dreary's 25 credit agents worked 1,920 hours and processed 2,500 applications. The total labor cost for the agents during this period was $29,184. What was Dreary's direct labor efficiency variance for this last pay period

Answer 1

See below

Step-by-step explanation:

Given the above, we will calculate first the standard hours allowed for actual work using the formula below

Standard hours allowed for actual work

= Total number of applications × Number of standard

= 2.500 × 8 hours × 10

= 2,000 hours

Therefore, the labor efficiency variance

= (Actual hours worked - Standard hours allowed for actual work) × Standard rate

= (1,920 - 2,000 ) × $15

= -$1,200

The labor efficiency variance is $1,200 favorable