Fletcher Company collected the following data regarding production of one of its products.

-Compute the direct labor efficiency variance.
A)$19,125 favorable.
B)$80,250 favorable.
C)$61,125 favorable.
D)$19,125 unfavorable.
E)$80,250 unfavorable.

Question

Fletcher Company collected the following data regarding production of one of its products.

-Compute the direct labor efficiency variance.
A)$19,125 favorable. 
B)$80,250 favorable. 
C)$61,125 favorable. 
D)$19,125 unfavorable. 
E)$80,250 unfavorable.

Quizplus · Accepted Answer

Direct labor efficiency variance can be calculated as follows:

Actual time taken - Standard time allowed × Standard wage rate

=(7,500 hours - 6,000 hours) × $5

= 7,500 × $5 - 6,000 × $5

= $37,500 - $57,750

= ($20,250)

The negative sign indicates that the variance is unfavorable. Therefore, the correct answer is D, $19,125 unfavorable.

Fletcher Company Collected the Following Data Regarding Production of One