Johnson Faucet Company manufactures faucets.The following data relate to the standards for direct labor: $$\begin{array} { | l | r | }
\hline \text { Standard direct labor hours per faucet } & 2.0 \
\hline \text { Standard direct labor rate per hour } & \$ 18.50 \
\hline
\end{array}$$ Johnson Faucet Company had the following actual results for August:
$\begin{array} { | l | r | }
\hline \text { Actual direct labor hours } & 3,800 \
\hline \text { Actual total direct labor cost } & \$ 52,750 \
\hline \text { Actual number of faucets produced } & 1,850 \
\hline
\end{array}$ What is the direct labor efficiency variance for August?

Question

Johnson Faucet Company manufactures faucets.The following data relate to the standards for direct labor: $$\begin{array} { | l | r | } 
\hline \text { Standard direct labor hours per faucet } & 2.0 \
\hline \text { Standard direct labor rate per hour } & \$ 18.50 \
\hline
\end{array}$$ Johnson Faucet Company had the following actual results for August:
$\begin{array} { | l | r | } 
\hline \text { Actual direct labor hours } & 3,800 \
\hline \text { Actual total direct labor cost } & \$ 52,750 \
\hline \text { Actual number of faucets produced } & 1,850 \
\hline
\end{array}$ What is the direct labor efficiency variance for August?

Quizplus · Accepted Answer

Direct labor efficiency variance = (Standard hours for actual output - Actual hours worked) x Standard wage rate

Standard hours for actual output = 1,500 units x 0.8 hours per unit = 1,200 hours
Actual hours worked = 1,600 hours
Standard wage rate = $12 per hour

Direct labor efficiency variance = (1,200 - 1,600) x $12 = $1,850 unfavorable.

Therefore, the correct answer is option D, $1,850 unfavorable.

Johnson Faucet Company Manufactures Faucets Johnson Faucet Company Had the Following Actual Results for August