GMeadowlark has a direct labor standard of 2.1 hours per unit of output. Each employee has a standard wage rate of $22.50 per hour. During July, Meadowlark paid $94,750 to employees for 4,445 hours worked. 2,200 units were produced during July. What is the direct labor efficiency variance?

The direct labor efficiency variance is $5,262.50.

Explanation:

Direct labor rate = (standard rate - actual rate)*actual hours worked

                            = ($22.50*4445) - $94750

                            = $5,262.50

Therefore, The direct labor efficiency variance is $5,262.50.

 $3,937.5 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

Labour efficiency variance is determined as follows:

                                                                                        Hours

2,200 units should have taken (2,200 ×  2.1 hrs)             4620                

but did take                                                                        4,445

Efficiency variance ( in hours )                                          175  favorable .

× standard labour rate                                                       × $22.5

Labour efficiency  variance ($)                                      $3,937.5 favorable

answer; normative economics;