Kingston Company produces a hover board, which has standard requirements of two hours per board at a direct labor rate per hour of $18. In the last quarter, 2,000 hover boards were produced using 4,200 direct labor hours at rate of $19.00 per hour. The direct labor (DL) efficiency variance for last quarter was
A) $7,200 unfavorable.
B) $7,200 favorable.
C) $3,600 unfavorable.
D) $3,600 favorable.

Question

Quizplus · Accepted Answer

Direct Labor (DL) Efficiency Variance = (AQ x SP) - (SQ x SP); SP = (2 hrs. x $18) = $36 and SQ = 2,000 x 2 hrs. = 4,000 hrs.; DL Efficiency Variance = (4,200 x $36) - (4,000 x $36) = $7,200 Unfavorable

Kingston Company Produces a Hover Board, Which Has Standard Requirements