Use the following data to find the direct labor efficiency variance.

Use the following data to find the direct labor efficiency variance.

Direct labor standard (4.5 hrs.@ $ 6/hr.)	$27per finished unit
Actual hours worked per unit	4.0 hrs
Actual units produced	4,000 units
Actual rate per hour	$6.25

rev: 11_05_2014_QC_58619

	$16,000 unfavorable
	$3,000 favorable
	$4,000 unfavorable
	$12,000 favorable
	$16,000 favorable

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  Babita S answered this 16 minutes later

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  213 answers • 77% Best Answer

  Direct labor efficiency variance = (AH × SR) – (SH × SR )
  = (4000*4*$6) - (4000*4.5*$6) = $12,000 Favorable
  

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  HK Manji answered this 33 minutes later

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  84 answers • 51% Best Answer

  Solution
  Actual Units Produced	4,000
  × Standard Direct Labor Hours Per Unit	4.5
  Standard Direct Labor Hours Allowed	18000
  Standard Direct Labor Hours Allowed	18000
  ? Actual Direct Labor Hours Used	16000
  Difference	2000
  × Standard Direct Labor Rate	$ 6
  Direct Labor Efficiency Variance	$ 12000

  Since the direct labor efficiency variance is positive, it is favorable.