How is the direct labor efficiency variance calculated?
A)The difference between the standard labor hours allowed and the actual labor hours used multiplied by the actual labor rate
B)The difference between the standard labor hours allowed and the actual labor hours used multiplied by the standard labor rate
C)The difference between the standard labor hours and the actual labor hours used
D)The difference between the standard labor rate and the actual labor rate

Question

Quizplus · Accepted Answer

The direct labor efficiency variance measures the difference between the actual hours worked and the standard hours allowed for the actual level of output achieved, multiplied by the standard labor rate. Therefore, option B is the correct formula for calculating the direct labor efficiency variance. Option A refers to the direct labor rate variance, option C refers to the direct labor quantity variance, and option D refers to the direct labor rate variance.

How Is the Direct Labor Efficiency Variance Calculated