Green Garden Supply budgeted three hours of direct labor per unit at $10.00 per hour to produce 500 units of product.The 500 units were completed using 1,600 hours of direct labor at $10.50 per hour.What is the direct labor efficiency variance?

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Quizplus · Accepted Answer

The direct labor efficiency variance is calculated as (Actual hours - Standard hours) x Standard rate. Standard hours for 500 units = 500 units x 3 hours/unit = 1500 hours. Actual hours = 1600 hours. Standard rate = $10.00/hour. Efficiency variance = (1600 - 1500) x $10 = $1,000 unfavorable.

Green Garden Supply Budgeted Three Hours of Direct Labor Per