Question

gMeadowlark has a direct labor standard of 2.1 hours per unit of output. Each employee has a standard wage rate of $22.50 per hour. During July, Meadowlark paid $94,750 to employees for 4,445 hours worked. 2,200 units were produced during July. What is the direct labor efficiency variance?

Answer 1

$3,937.5 favorable

Step-by-step explanation:

Labour efficiency variance is the difference between the actual time taken to achieve a given production output less the standard hours allowed for same multiplied by the standard labour rate

Labour efficiency variance is determined as follows:

Hours

2,200 units should have taken (2,200 × 2.1 hrs) 4620

but did take 4,445

Efficiency variance ( in hours ) 175 favorable .

× standard labour rate × $22.5

Labour efficiency variance ($) $3,937.5 favorable

Answer 2

The direct labor efficiency variance is $5,262.50.

Step-by-step explanation:

Direct labor rate = (standard rate - actual rate)*actual hours worked

= ($22.50*4445) - $94750

= $5,262.50

Therefore, The direct labor efficiency variance is $5,262.50.