Use the following information for the next 6 questions.
Hyteck, Inc. is a capital intensive firm. Indirect costs make up nearly 70% of the product costs. The company has no direct material costs because customers provide the direct materials used for each job. To plan and control such costs, the firm employs flexible budgets and standard costs. Overhead rates, based on direct labor hours, are derived from the master budget.
-The direct labor efficiency variance was
A) $2,000 F
B) $2,800 U
C) $1,000 U
D) $1,000 F

Question

Use the following information for the next 6 questions.
Hyteck, Inc. is a capital intensive firm. Indirect costs make up nearly 70% of the product costs. The company has no direct material costs because customers provide the direct materials used for each job. To plan and control such costs, the firm employs flexible budgets and standard costs. Overhead rates, based on direct labor hours, are derived from the master budget. 
-The direct labor efficiency variance was
A) $2,000 F 
B) $2,800 U 
C) $1,000 U 
D) $1,000 F

Quizplus · Accepted Answer

The direct labor efficiency variance is calculated as (Actual Hours - Standard Hours) x Standard Rate. If the variance is unfavorable (U), it means more hours were used than expected.

Use the Following Information for the Next 6 Questions