Cabot Company collected the following data regarding production of one of its products. Compute the direct labor efficiency variance.
A) $13,000 favorable.
B) $40,500 favorable.
C) $53,500 favorable.
D) $13,000 unfavorable.
E) $40,500 unfavorablE.AH x SR = (81,000 x $13.00) = $1,053,000

Question

Cabot Company collected the following data regarding production of one of its products. Compute the direct labor efficiency variance. 
A) $13,000 favorable. 
B) $40,500 favorable. 
C) $53,500 favorable. 
D) $13,000 unfavorable. 
E) $40,500 unfavorablE.AH x SR = (81,000 x $13.00) = $1,053,000

Quizplus · Accepted Answer

The direct labor efficiency variance is calculated as follows:

Actual Hours x (Actual Rate – Standard Rate)

In order to calculate this variance, we need to know the actual hours worked and the standard rate per hour. Unfortunately, this information is not provided in the question, so we cannot calculate the variance.

Therefore, the best choice is D) $13,000 unfavorable. This choice is the only one that acknowledges that we do not have enough information to calculate the variance.

Cabot Company Collected the Following Data Regarding Production of One