Swan Company has a direct labor standard of 15 hours per unit of output. Each employee has a standard wage rate of $14 per hour. During March, employees worked 13,100 hours. The direct labor rate variance was $9,170 favorable, the direct labor efficiency variance was $15,400 unfavorable. How many units were produced?
A) 873 units
B) 655 units
C) 1,100 units
D) 800 units

Question

Quizplus · Accepted Answer

The direct labor efficiency variance is calculated as (Actual hours - Standard hours) x Standard rate. Given the unfavorable variance of $15,400 and a standard rate of $14, the difference in hours is 1,100 hours. Since 13,100 actual hours were worked, the standard hours should have been 12,000 (13,100 - 1,100). With a standard of 15 hours per unit, 800 units were produced (12,000 / 15).

Swan Company Has a Direct Labor Standard of 15 Hours