The actual cost of direct labor per hour is $16.00 and the standard cost of direct labor per hour is $9.50. The direct labor hours allowed per finished unit is 0.25 hour. During the current period, 5,700 units of finished goods were produced using 3,500 direct labor hours. How much is the direct labor efficiency variance?

$19,713 unfavorable

Explanation:

Direct labor efficiency variance tells us that how the direct labor is used to product the standard numbers of share. It is calculate by multiplying the difference of actual labor hours and standard labor hours with standard rate.

Formula for the efficiency variance

Direct labor efficiency variance = (Actual Hours - Standard Hours ) x Standard Rate

Direct labor efficiency variance = (3,500 - (0.25x5,700 ) x $9.5

Direct labor efficiency variance = (3500 - 1425 ) x $9.5

Direct labor efficiency variance = $19,713 unfavorable

As the actual Labor hours spent is higher than the estimated so, the efficiency variance id unfavorable.

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