Banner Systems is a start-up company that makes connectors for high-speed Internet connections. Banner has budgeted three hours of direct labor per connector, at a standard cost of $ 13 per hour. During August, technicians actually worked 190 hours completing 78 connectors. All 78 connectors actually produced were sold. Banner paid the technicians $ 13.80 per hour. What is Banner's direct labor efficiency variance for August?

Question

Luis

Business

4 April, 19:21

Banner Systems is a start-up company that makes connectors for high-speed Internet connections. Banner has budgeted three hours of direct labor per connector, at a standard cost of $ 13 per hour. During August, technicians actually worked 190 hours completing 78 connectors. All 78 connectors actually produced were sold. Banner paid the technicians $ 13.80 per hour. What is Banner's direct labor efficiency variance for August?

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Taryn Bass · Answer 1

572 Favorable

Explanation:

Direct Labour efficiency Variance:

= (Standard Labour Hour - Actual Labour Hour) * Standard Rate

= [ (78 connectors * 3 hours of direct labor per connector) - (190 hours) ] * $13 per hour

= [234 hours of direct labor - 190 hours] * $13 per hour

= 44 hours * $13 per hour

= $572 Favorable

Therefore, Banner's direct labor efficiency variance for August is $572 Favorable.