Hobart Company manufactures patio umbrellas.The direct labor standard for each umbrella is 1.25 direct labor hours at a standard rate of $12.00 per hour.During June, Hobart used 36,000 direct labor hours to produce 30,000 umbrellas.Hobart's direct labor payroll totaled $428,400.What is Hobart's direct labor efficiency variance for November?
A)$3,600 unfavorable
B)$3,600 favorable
C)$18,000 favorable
D)$18,000 unfavorable

Question

Quizplus · Accepted Answer

Direct labor efficiency variance = (Standard direct labor hours - Actual direct labor hours) x Standard rate per hour

Standard direct labor hours = 1.25 hours per unit x 30,000 units = 37,500 hours

Actual direct labor hours = 36,000 hours

Direct labor efficiency variance = (37,500 - 36,000) x $12.00 = $18,000 favorable

Hobart Company Manufactures Patio Umbrellas