High School

Charles, the production manager, was pleased at the company's income statement results. Actual DL cost was only 53,460, compared to the budgeted 61,500, while actual sales volume came in 200 units below original projections. The company actually used 2,700 DL hours to make the 1,300 units produced and sold. Each unit was budgeted to take 2 DL hours; each DL hour was budgeted at 20.50 per hour. Calculate the company's DL price and DL efficiency variances?

Answer :

DL price and DL efficiency variances are essential in analyzing labor costs in a business setup.

DL Price Variance: DL price variance is calculated as the difference between the actual price paid for labor and the standard price, multiplied by the actual hours used. In this case, DL Price Variance = (Actual DL Hours * (Actual Price - Standard Price)).

DL Efficiency Variance: DL efficiency variance is the difference between actual hours worked and standard hours allowed, multiplied by the standard rate. DL Efficiency Variance = (Standard Hours - Actual DL Hours) * Standard Price.

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