Question

The standard direct labor cost for producing one unit of product is 5 direct labor hours at a standard rate of pay of $20. Last month, 18000 units were produced and 88000 direct labor hours were actually worked at a total cost of $1584000. The direct labor quantity variance was

Answer 1

Answer:

Direct labor time (efficiency) variance= $40,000 favorable

Explanation:

Giving the following information:

The standard direct labor cost for producing one unit of product is 5 direct labor hours at a standard rate of pay of $20.

Last month, 18000 units were produced, and 88000 direct labor hours.

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

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

Standard quantity= 18,000*5= 90,000

Direct labor time (efficiency) variance= (90,000 - 88,000)*20

Direct labor time (efficiency) variance= $40,000 favorable