Using the labor time standard of 0.5 labor hour per unit and a labor cost standard of $10 per labor hour for a 10 pound bag of chocolate and the following actual cost and usage data, compute the direct labor efficiency variance. Direct labor haurs used $\quad 4,950 $ hours
Total cost of direct labor $\quad \$ 53,460$
Number of good urits produced $\quad 9,000 $units
A) $3,960 (F)
B) $3,960 (U)
C) $4,500 (U)
D) $4,500 (F)

Question

Using the labor time standard of 0.5 labor hour per unit and a labor cost standard of $10 per labor hour for a 10 pound bag of chocolate and the following actual cost and usage data, compute the direct labor efficiency variance. Direct labor haurs used  $\quad 4,950 $ hours
Total cost of direct labor $\quad \$ 53,460$
Number of good urits produced $\quad 9,000 $units
A) $3,960 (F)
B) $3,960 (U)
C) $4,500 (U)
D) $4,500 (F)

Quizplus · Accepted Answer

The direct labor efficiency variance is calculated as (Actual hours - Standard hours) x Standard rate. Standard hours for 9,000 units = 9,000 x 0.5 = 4,500 hours. The variance is (4,950 - 4,500) x $10 = $4,500 (U).

Using the Labor Time Standard of 0 4,950\quad 4,950 4,950 Hours Total Cost of Direct Labor

Using the Labor Time Standard of 0 $\quad 4,950$ Hours
Total Cost of Direct Labor