Assembly line workers at Thompson Manufacturing worked a total of 8,800 direct labor hours to produce 36,000 units.The standard for producing one unit is 15 minutes at a wage rate of $10.If the actual wage rate was $10.50 per direct labor hour, Thompson's direct labor efficiency variance is
A)$2,000 favorable
B)$2,000 unfavorable
C)$2,100 favorable
D)$2,100 unfavorable

Question

Quizplus · Accepted Answer

The standard hours for 36,000 units is 36,000 units * 15 minutes/unit = 540,000 minutes or 9,000 hours. The actual hours worked were 8,800. The efficiency variance is (Standard hours - Actual hours) * Standard rate = (9,000 - 8,800) * $10 = $2,000 favorable.

Assembly Line Workers at Thompson Manufacturing Worked a Total of 8,800