Video Products budgeted 2 hours of direct labor per unit at $9.00 per hour to produce 3,500 units of product. The 3,500 units were completed using 7,350 hours at $9.25 per hour. What is the direct labor efficiency variance?
A) $3,500 unfavorable
B) $4,988 favorable
C) $1,750 favorable
D) $3,150 unfavorable

Question

Quizplus · Accepted Answer

The direct labor efficiency variance is calculated as (Actual Hours - Standard Hours) x Standard Rate. Standard Hours = 3,500 units x 2 hours/unit = 7,000 hours. Variance = (7,350 - 7,000) x $9.00 = $3,150 unfavorable.

Video Products Budgeted 2 Hours of Direct Labor Per Unit