Enwall Corporation's standard wage rate is $11.20 per direct labor-hour (DLH) and according to the standards, each unit of output requires 2.9 DLHs. In December, 5,900 units were produced, the actual wage rate was $10.20 per DLH, and the actual hours were 14,150 DLHs. The Labor Efficiency Variance for December would be recorded as a:
A)debit of $33,152.
B)credit of $30,192.
C)credit of $33,152.
D)debit of $30,192.

Question

Quizplus · Accepted Answer

The Labor Efficiency Variance is calculated as (Actual Hours - Standard Hours) x Standard Rate. In this case, the Actual Hours are 14,150 DLHs, the Standard Hours are 5,900 units x 2.9 DLHs = 17,110 DLHs, and the Standard Rate is $11.20 per DLH. Therefore, the Labor Efficiency Variance is (14,150 DLHs - 17,110 DLHs) x $11.20 per DLH = $33,152. Since the actual hours are less than the standard hours, the variance is favorable and would be recorded as a credit.

Enwall Corporation's Standard Wage Rate Is $11