Education Products Company gathered the following information for Job #155:
$$\begin{array} { | l | l | l | }
\hline & \text { Standard Total Cost } & \text { Actual Total Cost } \
\hline \text { Direct materials: } & & \
\hline \text { Standard: } 1,000 \text { pints at } \$ 5 / \text { pint } & \$ 5,000 & \
\hline \text { Actual: } 1,160 \text { pints at } \$ 6 / \text { pint } & & \$ 6,960 \
\hline \text { Direct labor: } & & \
\hline \text { Standard: } 500 \text { hours at } \$ 7.50 / \mathrm { hr } & \$ 3,750 & \
\hline \text { Actual: } 480 \text { hours at } \$ 7.25 / \mathrm { hr } . & & \$ 3,480 \
\hline
\end{array}$$ What is the direct labor efficiency variance?

Question

Education Products Company gathered the following information for Job #155:
$$\begin{array} { | l | l | l | } 
\hline & \text { Standard Total Cost } & \text { Actual Total Cost } \
\hline \text { Direct materials: } & & \
\hline \text { Standard: } 1,000 \text { pints at } \$ 5 / \text { pint } & \$ 5,000 & \
\hline \text { Actual: } 1,160 \text { pints at } \$ 6 / \text { pint } & & \$ 6,960 \
\hline \text { Direct labor: } & & \
\hline \text { Standard: } 500 \text { hours at } \$ 7.50 / \mathrm { hr } & \$ 3,750 & \
\hline \text { Actual: } 480 \text { hours at } \$ 7.25 / \mathrm { hr } . & & \$ 3,480 \
\hline
\end{array}$$ What is the direct labor efficiency variance?

Quizplus · Accepted Answer

The direct labor efficiency variance is calculated as (Actual Hours - Standard Hours) x Standard Rate. Here, it's (480 - 500) x $7.50 = -20 x $7.50 = -$150, indicating a $150 favorable variance because less hours were used than planned.

Education Products Company Gathered the Following Information for Job #155