Question

Benson produced 4000 units during the quarter. At the end of the quarter, an examination of the labor costs records showed that the company used 25,000 direct labor hours and actual total direct labor costs were $250,000. What is the direct labor efficiency variance?
A) $80,000 F
B) $80,000 U
C) $70,000 U
D) $70,000 F

Answer 1

Answer:

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

Explanation:

Giving the following information:

Benson produced 4000 units during the quarter. At the end of the quarter, an examination of the labor costs records showed that the company used 25,000 direct labor hours and actual total direct labor costs were $250,000.

We need the information regarding the standard rate for each hour of labor and the number of hours required to manufacture each unit. The formula for direct labor efficiency variance is:

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