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    Question

    The organization budgeted $400,000 for 40,000 hours of

    direct labor to complete 16,000 units of finished product. The firm used 42,000 direct labor hours and completed 17,000 units of finished product. What is the direct labor efficiency variance if the actual wage rate is 11/hour?
    A 2000F Correct Answer Incorrect Answer
    B 5000F Correct Answer Incorrect Answer
    C 5000A Correct Answer Incorrect Answer
    D 2000A Correct Answer Incorrect Answer
    E 4000A Correct Answer Incorrect Answer

    Solution

    Answer: LEV = (Actual Hours – Standard Hours) * Standard Rate .Here, LEV = (42000-42500)*10 = 5000F Here, Standard rate = 400000/40000 = 10/ hour And standard hours = 17000*40000/16000 = 42500.

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