How Hard The Day, Inc. makes a product that has the following direct labor standards: Standard direct labor-hours 1.4 hours per unit Standard direct labor rate $ 12.00 per hour The company budgeted for production of 5,400 units in January, but actual production was 5,500 units. The company used 6,800 direct labor-hours to produce this output. The actual total direct labor cost was $82,960. The direct labor efficiency variance for January is:

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Business

Dale Ballard

24 February, 08:13

How Hard The Day, Inc. makes a product that has the following direct labor standards: Standard direct labor-hours 1.4 hours per unit Standard direct labor rate $ 12.00 per hour The company budgeted for production of 5,400 units in January, but actual production was 5,500 units. The company used 6,800 direct labor-hours to produce this output. The actual total direct labor cost was $82,960. The direct labor efficiency variance for January is:

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Makai · Answer 1

Direct labor time (efficiency) variance = $10,800 favorable

Explanation:

Giving the following information:

Standard direct labor-hours 1.4 hours per unit

Standard direct labor rate $ 12.00 per hour

Actual production was 5,500 units.

The company used 6,800 direct labor-hours to produce this output.

To calculate the direct labor efficiency variance, we need to use the following formula:

Direct labor time (efficiency) variance = (Standard Quantity - Actual Quantity) * standard rate

Standard quantity = 5,500*1.4 = 7,700

Direct labor time (efficiency) variance = (7,700 - 6,800) * 12

Direct labor time (efficiency) variance = $10,800 favorable