Yola Company manufactures a product with standards for direct labour of 4 direct labour-hours per unit at a cost of $12.00 per direct labour-hour.During June,1,000 units were produced using 4,100 hours at $12.20 per hour.The direct labour efficiency variance was:
A) $1,200 favourable.
B) $1,200 unfavourable.
C) $2,020 favourable.
D) $2,020 unfavourable.

Question

Quizplus · Accepted Answer

The calculation for direct labour efficiency variance is as follows:

Actual Direct Labour Hours - Standard Direct Labour Hours × Standard Direct Labour Rate

(4,100 hours - 4,000 hours) × $12 per hour = $1,200 unfavourable

Therefore, the best answer is B, $1,200 unfavourable.

Yola Company Manufactures a Product with Standards for Direct Labour