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.

Question

Quizplus · Accepted Answer

The direct labor efficiency variance is calculated as the difference between the actual hours worked and the standard hours allowed for the actual production, multiplied by the standard rate per hour. Without specific data on actual hours, standard hours, and the standard rate, we cannot compute the exact figure. However, the term "unfavorable" indicates that the actual labor hours were more than the standard hours allowed for the actual production, leading to higher costs.

Cabot Company Collected the Following Data Regarding Production of One