Sue Corporation has provided the following information:
Direct labor standard per unit: 2.5 hours
Standard cost per labor hour: $16.00
Actual number of direct labor hours incurred: 1,975
Actual cost of direct labor: $15.50
Actual number of units produced: 750
What is the direct labor efficiency variance?
A) $1,550 unfavorable
B) $1,550 favorable
C) $1,600 favorable
D) $1,600 unfavorable

Question

Quizplus · Accepted Answer

The direct labor efficiency variance is calculated as (Actual hours - Standard hours) x Standard rate. Standard hours = 750 units x 2.5 hours/unit = 1,875 hours. Variance = (1,975 - 1,875) x $16 = $1,600 unfavorable.

Sue Corporation Has Provided the Following Information