Question

Belle Auto Detailing reported the following results for the past week: Actual number of cars detailed 110 Actual direct labor hours used 275 Actual total direct labor cost $6800 ​ ​ Budgeted number of cars to be detailed 280 Standard direct labor cost per hour $8.46 Standard direct labor per car 1.5 What is Belle's direct labor efficiency variance? Group of answer choices $2720 favorable $931 unfavorable $2720 unfavorable $931 favorable

Answer 1

Answer:

The correct answer is B.

Explanation:

Giving the following information:

Actual number of cars detailed 110

Actual direct labor hours used 275

Standard direct labor cost per hour $8.46

Standard direct labor per car 1.5

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

Actual quantity= 1.5*110= 165 hours

Direct labor time (efficiency) variance= (165 - 275)*8.46

Direct labor time (efficiency) variance=  $930.6 unfavorable