Asked by Juana Jacal on Jul 24, 2024
Verified
Chhom Corporation makes a product whose direct labor standards are 0.4 hours per unit and $19.00 per hour. In November the company produced 1,800 units using 760 direct labor-hours. The actual direct labor cost was $13,300.The labor efficiency variance for November is:
A) $700 Favorable
B) $760 Favorable
C) $760 Unfavorable
D) $700 Unfavorable
Labor Efficiency Variance
The difference between the actual hours worked and the standard hours allowed, multiplied by the standard labor rate, indicating efficiency in labor usage.
Direct Labor Standards
The predetermined amount of labor time and cost that it should ideally take to produce one unit of a product, used for budgeting and performance evaluation.
Actual Direct Labor Cost
The total expense incurred from the wages and associated benefits of workers directly involved in the manufacturing of a product.
- Explore and tally variances in direct labor, especially concerning rate and efficiency.
Verified Answer
Standard direct labor hours for the 1,800 units produced = 1,800 x 0.4 = 720 hours
Labor efficiency variance = (Actual direct labor hours - Standard direct labor hours) x Standard hourly rate
= (760 - 720) x $19
= $760 Unfavorable
Learning Objectives
- Explore and tally variances in direct labor, especially concerning rate and efficiency.
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