The following information is presented for the Maybeel Manufacturing Company.
- Direct labor rate standard is $11.55.
- Direct labor efficiency standard is 2.5 hours per unit.
- Budgeted production is 1,200 units.
- Production required 2,910 direct labor hours at a cost of $33,174.
- Actual production is 1,150 units.
What is the direct labor efficiency variance?
A) $404.25 Favorable
B) $404.25 Unfavorable
C) $1,039.50 Favorable
D) $1,039.50 Unfavorable

Question

Quizplus · Accepted Answer

To calculate the direct labor efficiency variance, we need to use the following formula:

Direct Labor Efficiency Variance = (Actual Hours - Standard Hours) x Standard Rate

Actual Hours = 2,910 hours
Standard Hours = (1,150 units x 2.5 hours per unit) = 2,875 hours
Standard Rate = $11.55 per hour

Direct Labor Efficiency Variance = (2,910 - 2,875) x $11.55
Direct Labor Efficiency Variance = $404.25 Unfavorable

Therefore, the answer is B - $404.25 Unfavorable.

The Following Information Is Presented for the Maybeel Manufacturing Company