A company has a standard of 2 hours of direct labor per unit produced and $18 per hour for the labor rate.During last period,the company used 9,500 hours of direct labor at a $152,000 total cost to produce 4,000 units.Compute the direct labor rate and efficiency variances.
A) Rate variance: $19,000 unfavorable; Efficiency variance: $27,000 favorable.
B) Rate variance: $63,829 unfavorable; Efficiency variance: $99,000 unfavorable.
C) Rate variance: $152,000 favorable; Efficiency variance: $99,000 unfavorable.
D) Rate variance: $19,000 favorable; Efficiency variance: $27,000 unfavorable.
E) Rate variance: $152,000 unfavorable; Efficiency variance: $99,000 favorable.

Question

Quizplus · Accepted Answer

Rate variance = (9,500 hours x $18) - $152,000 = $19,000 favorable
Efficiency variance = ($18 x 9,500 hours) - [$18 x (4,000 units x 2 hours)] = $27,000 unfavorable

A Company Has a Standard of 2 Hours of Direct