Clement Marine Stores Company manufactures special metallic materials and decorative fittings for luxury yachts that require highly skilled labor.Clement uses standard costs to prepare its flexible budget.For the first quarter of the year,direct materials and direct labor standards for one of their popular products were as follows: Direct materials: 4 pounds per unit; $3 per pound
Direct labor: 5 hours per unit; $17 per hour
Clement produced 4,000 units during the quarter.At the end of the quarter,an examination of the labor costs records showed that the company used 22,000 direct labor hours and actual total direct labor costs were $390,000.The direct labor efficiency variance was $34,000 U.Which of the following is a logical explanation for this variance?

Question

Quizplus · Accepted Answer

Direct labor efficiency variance measures the difference between actual hours worked and the standard hours allowed for the actual output, multiplied by the standard labor rate. A favorable variance means that fewer labor hours were used than allowed by the standards, which saves costs. In this case, $34,000 U variance indicates that the company used 22,000 actual labor hours, which is 1,000 hours (22,000 - 21,000) more than the 21,000 hours allowed by the standard for the production of 4,000 units. Therefore, the company used more labor hours than allowed by the standards, causing the variance to be unfavorable.

Clement Marine Stores Company Manufactures Special Metallic Materials and Decorative