A company has a standard direct labor cost of $6 for a single unit of production. The standard wage rate is $3 per hour. During May, 1 100 units were produced. Direct labor was paid for 2,500 hours at a total cost of $7,400. Calculate the direct labor efficiency variance for May.
sir i got the answer like 2400 adverse but the answers are
1)900(A)
2)900(F)
3)888(A)
4)300(A)
can you explain me this
Ask the Tutor ACCA MA
variance analysis
5y ago#1The standard time per unit is $6/$3 = 2 hours.
The time for the actual production should have been 1,100 x 2 = 2,200 hours.
The actual time taken was 2,500 hours, which is 300 hours more than it should have been.
Therefore the labour efficiency variance is 300 hours x $3 per hour = $900 adverse.
Have you watched my free lectures on this? The lectures are a complete free course for Paper MA and cover everything needed to be able to pass the exam well.
yes sir thank you
5y ago#3You are welcome :-)
Sign into reply to this topic.