Emerald Marine Stores Company manufactures special metallic materials and decorative fittings for luxury yachts that require highly skilled labor.Emerald uses standard costs to prepare its flexible budget.For the first quarter of 2015,direct material and direct labor standards for one of their popular products were as follows: Direct materials: 3 pounds per unit; $4 per pound
Direct labor: 4 hours per unit; $15 per hour
Emerald produced 5,000 units during the quarter.At the end of the quarter,an examination of the labor costs records showed that the company used 25,000 direct labor hours and actual total direct labor costs were $375,000.What is the direct labor efficiency variance?

Question

Quizplus · Accepted Answer

The direct labor efficiency variance is the difference between the actual direct labor hours used and the standard direct labor hours allowed for the actual output, multiplied by the standard direct labor rate.Actual direct labor hours used = 25,000 hoursStandard direct labor hours allowed = 5,000 units * 4 hours per unit = 20,000 hoursStandard direct labor rate = $15 per hourDirect labor efficiency variance = (Actual direct labor hours used - Standard direct labor hours allowed) * Standard direct labor rate= (25,000 hours - 20,000 hours) * $15 per hour= 5,000 hours * $15 per hour= $75,000 U

Emerald Marine Stores Company Manufactures Special Metallic Materials and Decorative