The following data relate to product no. 33 of La Quinta Corporation:
Direct labor standard: 5 hours at $14 per hour
Direct labor used in production: 45,000 hours at a cost of $639,000
Manufacturing activity: 8,900 units completed
The direct-labor efficiency variance is:
A) $7,000F.
B) $7,000U.
C) $7,100F.
D) $7,100U.
E) None of the other answers are correct.

Question

Quizplus · Accepted Answer

The direct-labor efficiency variance is calculated as (Actual hours - Standard hours) x Standard rate. Standard hours for 8,900 units = 8,900 x 5 = 44,500 hours. The variance is (45,000 - 44,500) x $14 = $7,000 unfavorable (U).

The Following Data Relate to Product No