The manager provided the following information. Direct manufacturing labor hours: 1,200 hours Actual units produced: 0.12 hour/unit Budgeted direct manufacturing labor hours: 12,000 units Budgeted direct manufacturing labor rate: $25 per hour Actual direct manufacturing labor rate: $24 per hour Compute the direct manufacturing labor efficiency variance.

Direct labor efficiency variance= $6,000 favorable

Explanation:

Giving the following information:

Direct manufacturing labor hours: 1,200 hours

Actual units produced: 12,000 units

Budgeted direct manufacturing labor hours: 0.12 hour/unit

Budgeted direct manufacturing labor rate: $25 per hour

Actual direct manufacturing labor rate: $24 per hour

To determine the direct labor efficiency rate, we need to use the following formula:

Direct labor efficiency variance= (Standard Quantity - Actual Quantity)*standard rate

Standard quantity= 0.12*12,000 units= 1,440 hours

Actual quantity= 1,200 hours

Direct labor efficiency variance= (1,440 - 1,200)*25= $6,000 favorable

It is favorable because it used a smaller number of hours to produce 12,000 units.

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