Bryan Company employs a standard cost system in which direct materials inventory is carried at standard cost. Bryan has established the following standards for the prime costs of one unit of product:
$\begin{array} { | l | r | r | r | }
\hline & \text { Standard Quantity } & \text { Standard Price } & \text { Standard Cost } \
\hline \text { Direct Materials } & 6 \text { kilograms } & \$ 3.50 / \text { kilogram } & \$ 21.00 \
\hline \text { Direct Labour } & 1.3 \text { hours } & \$ 11.00 / \text { hour } & \$ 14.30 \
\hline & & & \$ 35.30 \
\hline
\end{array}$During March, Bryan purchased 165,000 kilograms of direct materials at a total cost of $585,750. The total factory wages for March were $400,000, 90 percent of which were for direct labour. Bryan manufactured 25,000 units of product during March, using 151,000 kilograms of direct materials and 32,000 direct labour hours.

-What was the direct labour efficiency variance for March?
A) $5,500 favourable.
B) $5,500 unfavourable.
C) $5,625 favourable.
D) $5,625 unfavourable.

Question

Bryan Company employs a standard cost system in which direct materials inventory is carried at standard cost. Bryan has established the following standards for the prime costs of one unit of product:
$\begin{array} { | l | r | r | r | } 
\hline & \text { Standard Quantity } & \text { Standard Price } & \text { Standard Cost } \
\hline \text { Direct Materials } & 6 \text { kilograms } & \$ 3.50 / \text { kilogram } & \$ 21.00 \
\hline \text { Direct Labour } & 1.3 \text { hours } & \$ 11.00 / \text { hour } & \$ 14.30 \
\hline & & & \$ 35.30 \
\hline
\end{array}$During March, Bryan purchased 165,000 kilograms of direct materials at a total cost of $585,750. The total factory wages for March were $400,000, 90 percent of which were for direct labour. Bryan manufactured 25,000 units of product during March, using 151,000 kilograms of direct materials and 32,000 direct labour hours.

-What was the direct labour efficiency variance for March?
A) $5,500 favourable.
B) $5,500 unfavourable.
C) $5,625 favourable.
D) $5,625 unfavourable.

Quizplus · Accepted Answer

The direct labour efficiency variance is calculated as follows:Direct labour efficiency variance = (Standard direct labour hours - Actual direct labour hours) x Standard direct labour rate= (25,000 units x 1.3 hours/unit - 32,000 hours) x $11.00/hour= (32,500 hours - 32,000 hours) x $11.00/hour= 500 hours x $11.00/hour= $5,500 favourable

Bryan Company Employs a Standard Cost System in Which Direct