Answer:
Direct labor time (efficiency) variance= $6,150 favorable
Explanation:
Giving the following information:
Lion Company's direct labor costs for the month of January were as follows:
Actual total direct labor-hours 20,000
Standard total direct labor-hours 21,000
Direct labor rate variance - unfavorable $3,000
Total direct labor cost $126,000
First, we need to calculate the standard direct labor hour cost.
Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity
Actual rate= 126,000/20,000= 6.3
-3,000= (SR - 6.3)*20,000
-3,000= SR20,000 - 126,000
123,000/20,000= SR
6.15= Standard rate
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
Direct labor time (efficiency) variance= (21,000 - 20,000)*6.15
Direct labor time (efficiency) variance= $6,150 favorable
