LVN Corporation's direct labor costs and related information for the month of June were as follows: What is LVN Corporation's direct labor efficiency variance?

Question

LVN Corporation's direct labor costs and related information for the month of June were as follows:  What is LVN Corporation's direct labor efficiency variance?

Quizplus · Accepted Answer

To calculate the direct labor efficiency variance, we need to compare the actual hours worked with the standard hours allowed for the actual output.

Actual hours worked: 18,000
Standard hours allowed: 20,000 (10,000 units x 2 hours standard labor per unit)

Therefore, the direct labor efficiency variance can be calculated as:

Standard hours allowed - Actual hours worked x Standard labor rate
(20,000 - 18,000) x $17.50 = $35,000 unfavorable

Thus, the correct answer is (C) $1,750 unfavorable.

LVN Corporation's Direct Labor Costs and Related Information for the Month