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.
$\begin{array}{ll}
\text { Number of units produced } & 4,000 \
\text { Standard direct labor hours per unit } & 2 \
\text { Standard variable overhead rate } & \$ 2.50 \text { per hour } \
\text { Standard fixed overhead rate } & \$ 5.00 \text { per hour } \
\text { Budgeted fixed overhead costs } & \$ 40,800 \
\text { Actual variable overhead costs } & \$ 16,800 \
\text { Actual fixed overhead costs } & \$ 40,400 \
\text { Actual labor hours } & 8,000 \text { direct labor hours} \
\text { Total actual overhead } & \$ 57.200
\end{array}$

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. 
$\begin{array}{ll}
\text { Number of units produced } & 4,000 \
\text { Standard direct labor hours per unit } & 2 \
\text { Standard variable overhead rate } & \$ 2.50 \text { per hour } \
\text { Standard fixed overhead rate } & \$ 5.00 \text { per hour } \
\text { Budgeted fixed overhead costs } & \$ 40,800 \
\text { Actual variable overhead costs } & \$ 16,800 \
\text { Actual fixed overhead costs } & \$ 40,400 \
\text { Actual labor hours } & 8,000 \text { direct labor hours} \
\text { Total actual overhead } & \$ 57.200
\end{array}$

Quizplus · Accepted Answer

The direct labor efficiency variance is calculated as (Actual Hours - Standard Hours) x Standard Rate. Standard Hours = 4,000 units x 0.5 hours/unit = 2,000 hours. Variance = (8,000 - 2,000) x $10 = $60,000 (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)