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Direct labor efficiency variance

Lion Company's direct labor costs for the month of January were as follow:

Actual total direct labor hours 20,000
Standard total direct labor hours 21,000
Direct labor rate variance unfavorable $3,000
Total direct labor cost $126,000

What was Lion's direct labor efficiency variance?

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Solution Preview

We know the following:
Actual Hours AH = 20,000
Actual Rate AR = $126,000 / 20,000 = $6.30
Standard Hours SH = 21,000

So we need to do some ...

Solution Summary

This provides an example of determining direct labor efficiency variance.