A Job Was Budgeted to Require 3 Hours of Labor

question 161

Multiple Choice

A job was budgeted to require 3 hours of labor per unit at $8.00 per hour. The job consisted of 8,000 units and was completed in 22,000 hours at a total labor cost of $198,000. What is the direct labor efficiency variance?

• A) $22,000 unfavorable.
• B) $22,000 favorable.
• C) $16,000 unfavorable.
• D) $16,000 favorable.
• E) $6,000 unfavorable.

---

Definitions:

Overapplied Overhead

A situation where the allocated overhead costs exceed the actual overhead expenses incurred.

Machine-Hours

A unit of measure indicating the total time production machinery is operated, used in calculating manufacturing costs and efficiencies.

Cost of Work

This could refer to the total expenses associated with performing a particular job or task, including labor, materials, and overhead costs.

Overapplied Overhead

A scenario in which the overhead costs assigned surpass the real overhead expenses incurred.