The actual cost of direct labor per hour is $16.00 and the standard cost of direct labor per hour is $9.50. The direct labor hours allowed per finished unit is 0.25 hour. During the current period, 5700 units of finished goods were produced using 3500 direct labor hours. How much is the direct labor efficiency variance?
A)$19,712.5 unfavorable
B)$19,712.5 favorable
C)$33,200 favorable
D)$33,200 unfavorable

Question

Quizplus · Accepted Answer

The direct labor efficiency variance is calculated as (Actual Hours - Standard Hours) x Standard Rate. Standard Hours = 5700 units x 0.25 hours/unit = 1425 hours. Efficiency Variance = (3500 - 1425) x $9.50 = $19,712.5 unfavorable.

The Actual Cost of Direct Labor Per Hour Is $16