Question

standard labor-hours per unit of output 8.5 hours standard labor rate $12.30 per hour the following data pertain to operations concerning the product for the last month: actual hours worked 6,300 hours actual total labor cost $74,970 actual output 800 units

Answer 1

Direct labor efficiency variance = $6,100 F.

Given that

Standard labor-hours per unit of output     8.5 hours

Standard labor rate                                     $12.30 per hour

Standard labor hours allowed                          6,800 hours (800 units *                                         8.5 hours allowed)

The following data pertain to operations concerning the product for the last month:

Actual hours worked  6,300 hours

Actual total labor cost  $74,970

Actual output                  800 units

We can determine the labor efficiency variance using the following equation:

1. Direct labor efficiency variance = (Standard hours allowed - Actual labor hours) * Standard rate

2. Direct labor efficiency variance = (6,800 hours - 6,300 hours) * $12.20

3. Direct labor efficiency variance = $6,100 F

The variance is favorable as the actual labor hours used are less than the standard hours allowed.

Hence the answer is Direct labor efficiency variance = $6,100 F.

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