The actual direct labor wage rate is $8.50 and 4,500 direct labor-hours were actuallyworked during the month. The standard direct labor wage rate is $8.00 and the standard quantity of hours allowed for the actual level of output was 5,000 direct laborhours. What is the direct labor efficiency variance?a. $4,000 favorableb. $4,000 unfavorablec. $4,500 unfavorabled. $4,500 favorable
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
The actual direct labor wage rate is $8.50 and 4,500 direct labor-hours were actually
worked during the month. The standard direct labor wage rate is $8.00 and the standard quantity of hours allowed for the actual level of output was 5,000 direct laborhours. What is the direct labor efficiency variance?
a. $4,000 favorable
b. $4,000 unfavorable
c. $4,500 unfavorable
d. $4,500 favorable
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