Answer:
Direct labor efficiency variance= $6,000 favorable
Explanation:
Giving the following information:
Direct manufacturing labor hours: 1,200 hours
Actual units produced: 12,000 units
Budgeted direct manufacturing labor hours: 0.12 hour/unit
Budgeted direct manufacturing labor rate: $25 per hour
Actual direct manufacturing labor rate: $24 per hour
To determine the direct labor efficiency rate, we need to use the following formula:
Direct labor efficiency variance= (Standard Quantity - Actual Quantity)*standard rate
Standard quantity= 0.12*12,000 units= 1,440 hours
Actual quantity= 1,200 hours
Direct labor efficiency variance= (1,440 - 1,200)*25= $6,000 favorable
It is favorable because it used a smaller number of hours to produce 12,000 units.
