Brown Company produces fine leather footballs. The standard cost for each footba

Question

Brown Company produces fine leather footballs. The standard cost for each football is:

Direct material 2 feet of leather at $4.00/foot $8.00
Direct labor 1.5 hours at $12.00/hour $18.00


During February, 1,200 footballs were produced. 2,600 feet of leather were purchased at $4.25 per foot. Of this, 2,300 feet were used in production. Direct labor cost incurred was $20,930 for 1,820 hours.
Reference: Ref 11-2


What is the direct labor efficiency variance?
Answer
$20 unfavorable
$240 unfavorable
$360 unfavorable
$360 favorable

Explanation / Answer

According to the given information,

Actual hours worked = 1,820

Standard rate = $12.00 per hour

Standard hours allowed is calculated as

Standard hours allowed = Labor required per hour x Number of foot balls produced

                                   = $1.5 x 1200

                                  = 1,800

The formula for calculating the Direct labor efficiency variance is

Direct labor efficiency variance = (Actual hours worked x Standard rate) - (Standard hours allowed x Standard rate)

                                               = (1,820 x $12) - (1,800 x $12)

                                               = $12 (1,820 - 1,800)

                                               = $240 unfavourable

Since the actual labor hours used are more than the standard hours allowed, the labor efficiency variance is unfavourable.

Hence the correct option is b) $240 unfavorable.

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.