Sammons Corporation had a favorable direct-labor efficiency variance of $6,000 for the period just ended. The actual wage rate was $0.50 more than the standard rate of $12.00. If the company's standard hours allowed for actual production totaled 9,500, how many hours did the firm actually work?
A) 9,000.
B) 9,020.
C) 9,980.
D) 10,000.
E) None of the other answers are correct.

Question

Quizplus · Accepted Answer

The direct-labor efficiency variance is calculated as (Standard Hours - Actual Hours) x Standard Rate. Given a favorable variance of $6,000 and a standard rate of $12, the equation is (9,500 - Actual Hours) x $12 = $6,000. Solving for Actual Hours gives 9,000 hours.

Sammons Corporation Had a Favorable Direct-Labor Efficiency Variance of $6,000