A company uses the following standard costs to produce a single unit of output. $$\begin{array} { l l l }
\text { Direct materials } & 6 \text { pounds at } \$ 0.90 \text { per pound } & = \$ 5.40 \
\text { Direct labor } & 0.5 \text { hour at } \$ 12.00 \text { per hour } & = \$ 6.00 \
\text { Marnfacturing overhead } & 0.5 \text { hour at } \$ 4.80 \text { per hour } & = \$ 2.40
\end{array}$$ During the latest month, the company purchased and used 58,000 pounds of direct materials at a price of $1.00 per pound to produce 10,000 units of output. Direct labor costs for the month totaled $56,350 based on 4,900 direct labor hours worked. Variable manufacturing overhead costs incurred totaled $15,000 and fixed manufacturing overhead incurred was $10,400. Based on this information, the direct labor efficiency variance for the month was:

Question

A company uses the following standard costs to produce a single unit of output. $$\begin{array} { l l l } 
\text { Direct materials } & 6 \text { pounds at } \$ 0.90 \text { per pound } & = \$ 5.40 \
\text { Direct labor } & 0.5 \text { hour at } \$ 12.00 \text { per hour } & = \$ 6.00 \
\text { Marnfacturing overhead } & 0.5 \text { hour at } \$ 4.80 \text { per hour } & = \$ 2.40
\end{array}$$ During the latest month, the company purchased and used 58,000 pounds of direct materials at a price of $1.00 per pound to produce 10,000 units of output. Direct labor costs for the month totaled $56,350 based on 4,900 direct labor hours worked. Variable manufacturing overhead costs incurred totaled $15,000 and fixed manufacturing overhead incurred was $10,400. Based on this information, the direct labor efficiency variance for the month was:

Quizplus · Accepted Answer

The direct labor efficiency variance is calculated as the difference between the actual direct labor hours used and the standard direct labor hours allowed for the actual output produced, multiplied by the standard direct labor rate.Actual direct labor hours used = 4,900 hoursStandard direct labor hours allowed = 10,000 units * 0.5 hour per unit = 5,000 hoursStandard direct labor rate = $12.00 per hourDirect labor efficiency variance = (Actual direct labor hours used - Standard direct labor hours allowed) * Standard direct labor rate= (4,900 hours - 5,000 hours) * $12.00 per hour= -100 hours * $12.00 per hour= -$1,200 unfavorable

A Company Uses the Following Standard Costs to Produce a Single