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27 May, 12:16

The following information describes a company's usage of direct labor in a recent period. The direct labor efficiency variance is:

Actual hours used 45,000

Actual rate per hour $15.00

Standard rate per hour $14.50

Standard hours for units produced 47,000

a. $29,000 unfavorable.

b. $29,000 favorable.

c. $22,500 unfavorable.

d. $52,500 favorable.

e. $52,500 unfavorable.

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Answers (1)
  1. 27 May, 12:40
    0
    Option (B) is correct.

    Explanation:

    Given that,

    Actual hours used = 45,000

    Actual rate per hour = $15.00

    Standard rate per hour = $14.50

    Standard hours for units produced = 47,000

    Direct Labor Efficiency Variance:

    = (Standard Hours for units produced - Actual Hours used) * Standard Rate per hour

    = (47,000 - 45,000) * 14.50

    = 29,000 Favorable
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