Question

Chhom Corporation makes a product whose direct labor standards are 0.9 hours per unit and $24 per hour. In November the company produced 7,150 units using 5,935 direct labor-hours. The actual direct labor cost was $124,635. The labor efficiency variance for November is:

Answer 1

Direct labor time (efficiency) variance=$17,160 unfavorable

Step-by-step explanation:

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= (7,150*0.9 - 7,150)*24

Direct labor time (efficiency) variance= (6,435 - 7,150)*24

Direct labor time (efficiency) variance=$17,160 unfavorable