Panther Tire Corporation manufactures automobile tires. Panther Tire Corporation reported the following budgeted (standard)and actual information last quarter data: What is the direct labor efficiency variance for last quarter?

Question

Panther Tire Corporation manufactures automobile tires. Panther Tire Corporation reported the following budgeted (standard)and actual information last quarter data:  What is the direct labor efficiency variance for last quarter?

Quizplus · Accepted Answer

The direct labor efficiency variance measures the difference between the actual hours worked and the budgeted hours multiplied by the budgeted rate per hour.

Budgeted hours = 6,000 
Budgeted rate per hour = $15 
Budgeted direct labor cost = 6,000 x $15 = $90,000

Actual hours worked = 5,500 
Rate per hour = $15 
Actual direct labor cost = 5,500 x $15 = $82,500

Direct labor efficiency variance = (actual hours - budgeted hours) x budgeted rate per hour
= (5,500 - 6,000) x $15 = $14,250 unfavorable.

Therefore, the correct answer is C.

Panther Tire Corporation Manufactures Automobile Tires