Using the labor time standard of 0.5 labor hour per unit and a labor cost standard of $10 per labor hour for a 10 pound bag of chocolate and the following actual cost and usage data,compute the direct labor efficiency variance. $$\begin{array} { l l }
\text { Direct labar hours used } & 4,950 \text { hours } \
\text { Total cost of direct labor } & \$ 53,460 \
\text { Number of good units produced } & 9,000 \text { units }
\end{array}$$

Question

Using the labor time standard of 0.5 labor hour per unit and a labor cost standard of $10 per labor hour for a 10 pound bag of chocolate and the following actual cost and usage data,compute the direct labor efficiency variance. $$\begin{array} { l l } 
\text { Direct labar hours used } & 4,950 \text { hours } \
\text { Total cost of direct labor } & \$ 53,460 \
\text { Number of good units produced } & 9,000 \text { units }
\end{array}$$

Quizplus · Accepted Answer

The direct labor efficiency variance is calculated as (Actual hours - Standard hours) x Standard rate. Standard hours for 9,000 units = 9,000 x 0.5 = 4,500 hours. The variance is (4,950 - 4,500) x $10 = $4,500 (U).

Using the Labor Time Standard of 0 A) $3,960 (F) B) $3,960 (U) C) $4,500 (U) D)

Using the Labor Time Standard of 0 A) $3,960 (F)
B) $3,960 (U)
C) $4,500 (U)
D)