Question

Hassock Corp. produces woven wall hangings. It takes 3 hours of direct labor to produce a single wall hanging. Hassock standard labor cost is $13 per hour. During August, Hassock produced 9,000 units and used 27,160 hours of direct labor at a total cost of $323,220. What is Hassocks labor efficiency variance for August?

Answer 1

Answer:

Direct labor time (efficiency) variance= $2,080 unfavorable

Explanation:

Giving the following information:

Standard= 3 hours of direct labor per unit

The standard labor cost is $13 per hour.

During August, Hassock produced 9,000 units and used 27,160 hours

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= (3*9,000 - 27,160)*13

Direct labor time (efficiency) variance= $2,080 unfavorable