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.
$\begin{array}{lr}
\text {Direct labor hours used }&\text {4,950 hours }\
\text { Total cost of direct labor}&\text {\$ 53,460 }\
\text {Number of good units prochuced }&\text { 9,000 units}\
\end{array}$

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. 
$\begin{array}{lr}
\text {Direct labor hours used }&\text {4,950 hours }\
\text { Total cost of direct labor}&\text {\$ 53,460 }\
\text {Number of good units prochuced }&\text { 9,000 units}\
\end{array}$

Quizplus · Accepted Answer

The direct labor efficiency variance is calculated as (Actual hours - Standard hours) x Standard rate. Standard hours = 9,000 units x 0.5 hours/unit = 4,500 hours. Variance = (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)