Martin Racing Company gathered the following actual results for the current month:
Budgeted production and standard costs were:

-What is the direct labor efficiency variance?

Question

Martin Racing Company gathered the following actual results for the current month:
 Budgeted production and standard costs were:
 
-What is the direct labor efficiency variance?

Quizplus · Accepted Answer

The direct labor efficiency variance is calculated as the difference between the actual hours worked and the standard hours allowed for the actual production, multiplied by the standard rate per hour. If the actual hours are greater than the standard hours, the variance is unfavorable because more time was spent on production than planned, indicating inefficiency. The choice of $750 unfavorable suggests that the actual labor used was more than what was expected or budgeted for the level of output achieved, leading to an unfavorable variance.

Martin Racing Company Gathered the Following Actual Results for the Current