Justin Time Guitars manufactures electric guitars. The following data relate to the standards for direct labor: Standard direct labor hours per guitar Standard direct labor rate per hour Justin Time had the following actual results for March: Actual direct labor hours Actual total direct labor cost Actual number of guitars produced What is the direct labor efficiency variance for March?

Question

Justin Time Guitars manufactures electric guitars. The following data relate to the standards for direct labor: Standard direct labor hours per guitar Standard direct labor rate per hour Justin Time had the following actual results for March: Actual direct labor hours Actual total direct labor cost Actual number of guitars produced What is the direct labor efficiency variance for March?

standard Ditect labour hour      3.5

Standard direct labour rate     $17

Actual direct labour hour           650

Actual direct labour cost        26200

Actual number of guitars produced - 525

Answer

  Efficiency variance      =$20,187.5

Explanation

Labour efficiency variance is the difference between the actual time taken to achieve a given production output less the standard hours allowed for same multiplied by the standard labour rate

                                                                                       Hours

525 units should have taken (525×  3.5)   =              1,837.5

but did take                                                                      650    

efficiency variance (hours)                                             1187.5  favorable

standard labor rate                                                   ×   $ 17

Efficiency variance  ($)                                            $20,187.5  favorable

  Efficiency variance      =$20,187.5      

answer; false pretense;