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.What was the direct labour efficiency variance?
A) $1,200 favourable.
B) $1,200 unfavourable.
C) $2,020 favourable.
D) $2,020 unfavourable.

Question

Quizplus · Accepted Answer

The direct labour efficiency variance is calculated as follows:

Actual hours worked - (standard hours per unit x actual units produced) x standard rate per hour
= (4,100 - (4 x 1,000)) x $12.00 = $1,200 unfavourable

Therefore, the best choice is B, as it represents the correct calculation of the direct labour efficiency variance based on the given information.

Yola Company Manufactures a Product with Standards for Direct Labour