Question

The following data relate to direct labor costs for the current period: Standard costs 7,500 hours at $11.70 Actual costs 6,400 hours at $10.50 What is the direct labor time variance

Answer 1

Direct labor time (efficiency) variance= $12,870 favorable

Step-by-step explanation:

Giving the following information:

Standard costs 7,500 hours at $11.70

Actual costs 6,400 hours

To calculate the direct labor time (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= (7,500 - 6,400)*11.7

Direct labor time (efficiency) variance= $12,870 favorable