In producing jelly beans, 1,000 hours of direct labor were used at a rate of $12 per hour. The standard was 1,100 at $12.25 per hour. What is the direct labor efficiency variance

Efficiency variance   = $1,225   favorable

Explanation:

Labour efficiency variance is the difference between the actual time taken to achieve a given production output less the standard hours allowed for same multiplied by the standard labour rate .

It occurs as result of workers working faster or slower than expected (i.e standard hour )

                                                                                Hours

standard hours                                                        1, 100

Actual hours                                                            1,000

efficiency varainec in Labour hour                        100 favorable

Standard labour rate                                             × $12.25f

Efficiency variance                                                     $1,225 favorable

Efficiency variance   = $1,225                                

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