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Answer :
The direct labor efficiency variance for August is $660.00 (OB. $66.60 F). Labor efficiency, also known as labor productivity, measures the effectiveness and efficiency of labor utilization in the production process.
To calculate the direct labor efficiency variance, we need to compare the actual hours worked to the standard hours allowed for the production achieved.
Standard hours allowed = Standard hours per unit * Actual units produced
Standard hours allowed = 3 hours/connector * 71 connectors
Standard hours allowed = 213 hours
Direct labor efficiency variance = (Standard hours allowed - Actual hours worked) * Standard labor rate
Given:
Actual hours worked = 158 hours
Standard labor rate = $15.00/hour
Direct labor efficiency variance = (213 hours - 158 hours) * $15.00/hour
Direct labor efficiency variance = 55 hours * $15.00/hour
Direct labor efficiency variance = $825.00
However, since the technicians were paid at a different rate of $15.80 per hour instead of the standard rate, we need to adjust the variance calculation:
Adjusted direct labor efficiency variance = Direct labor efficiency variance * (Actual labor rate - Standard labor rate)
Adjusted direct labor efficiency variance = $825.00 * ($15.80/hour - $15.00/hour)
Adjusted direct labor efficiency variance = $825.00 * $0.80/hour
Adjusted direct labor efficiency variance = $660.00
Therefore, the direct labor efficiency variance for August is $660.00 (OB. $66.60 F).
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