Frames Incorporated budgeted two hours of direct labor per unit at $10.75 per hour to produce 600 units of product. The 600 units were completed using 1800 hours of direct labor at $13.00 per hour. What is the direct labor efficiency variance?
A)$6450 unfavorable
B)$6450 favorable
C)$7800 unfavorable
D)$7800 favorable

Question

Quizplus · Accepted Answer

The formula for direct labor efficiency variance is:

(actual hours - standard hours) x standard rate

Here, 
Standard hours = 2 hours per unit x 600 units = 1200 hours
Standard rate = $10.75 per hour

Actual hours = 1800 hours
Actual rate = $13.00 per hour

So, 
Direct labor efficiency variance = (1800 - 1200) x $10.75 = $6,450 unfavorable.

Therefore, the correct answer is option A, which is $6,450 unfavorable.

Frames Incorporated Budgeted Two Hours of Direct Labor Per Unit