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24 November, 00:02

The standard direct labor cost for producing one unit of product is 5 direct labor hours ata standard rate of pay of $16. Last month, 15,000 units were produced and 73,500 directlabor hours were actually worked at a total cost of $1,080,000. The direct laborefficiency variance was

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  1. 24 November, 01:29
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    Answer: 24,000 (Favorable)

    Explanation:

    Given that,

    Standard direct labor cost for producing one unit of product (A) = 5

    Direct labor hours at a standard rate of pay (B) = $16

    Units produced in last month (C) = 15,000

    Direct labor hours (D) = 73,500

    Total cost = $1,080,000

    Direct labor efficiency variance = B * (C * A - D)

    = 16 * (15,000 * 5 - 73,500)

    = 24,000 (Favorable)
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