US CMA Part 1 · Chapter 3 · Question 8 of 30
A plant produced 25,000 units, each with a standard of 0.5 direct labor hours at $26 per hour. Actual hours worked were 12,400, at an actual rate of $26.40. What is the direct labor efficiency variance?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) $2,600 favorable
Explanation
Standard hours allowed = 25,000 x 0.5 = 12,500. Efficiency variance = (actual hours - standard hours) x standard rate = (12,400 - 12,500) x $26 = $2,600 favorable, because fewer hours were used than allowed. The standard rate, not the actual rate, is used.
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