If the actual direct labor-hours used is less than the standard direct labor-hours allowed for the actual output, then the journal entry to record the Labor Efficiency Variance would be a credit.

Question

Quizplus · Accepted Answer

A credit entry to Labor Efficiency Variance indicates that actual labor hours used were less than the standard hours allowed. This means that the actual labor cost is lower than the budgeted or standard cost, resulting in a favorable variance.

If the Actual Direct Labor-Hours Used Is Less Than the Standard