LR Kinncaid Company assembles steel components for trains.The standard labour cost per unit is:
3 hours @ £3.20 per hour
The actual results for last period were:
$$\begin{array} { l l }
\text { Production } & 6,000 \text { components } \
\text { Hours } & 33,000 \
\text { Wage rate (per hour) } & £ 3.25
\end{array}$$
Calculate the direct labour efficiency variance

Question

LR Kinncaid Company assembles steel components for trains.The standard labour cost per unit is:
3 hours @ £3.20 per hour
The actual results for last period were:
$$\begin{array} { l l } 
\text { Production } & 6,000 \text { components } \
\text { Hours } & 33,000 \
\text { Wage rate (per hour) } & £ 3.25
\end{array}$$
Calculate the direct labour efficiency variance

Quizplus · Accepted Answer

The direct labour efficiency variance is calculated as (Actual hours - Standard hours) x Standard rate. Standard hours for 6,000 components = 6,000 x 3 = 18,000 hours. Efficiency variance = (33,000 - 18,000) x £3.20 = £48,000 adverse.

LR Kinncaid Company Assembles Steel Components for Trains Calculate the Direct Labour Efficiency Variance A) £48,000 Favorable B)

LR Kinncaid Company Assembles Steel Components for Trains Calculate the Direct Labour Efficiency Variance
A) £48,000 Favorable
B)