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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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  1. 4 April, 19:43
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    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.
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