Question
Please check out the question below. I understand how to find the answer but I do not understand when it is considered favorable or Unfavorable.
Please check out the question below. I understand how to find the answer but I do not understand when it is considered "favorable" or "Unfavorable". Could you please explain to me when the direct labor efficiency variance is favorable or not?
When auto manufacturer BMW purchased the Rolls-Royce brand name, BMW had to hire and train a new staff of assembly workers. The new workers were paid $25 per hour, worked a total of 7,500 hours, and produced 2,000 cars. BMW budgeted for a standard labor rate of $27 per hour and 1.25 direct labor hours per car. What is the direct labor efficiency variance for the Rolls-Royce division?
A) $125,000 unfavorable
B) $125,000 favorable
C) $135,000 favorable
D) $135,000 unfavorable
Same here, why favorable or unfavorable? How can I determine if it is favorable or not?
When auto manufacturer BMW purchased the Rolls-Royce brand name, BMW had to hire and train a new staff of assembly workers. The new workers were paid $25 per hour, worked a total of 7,500 hours, and produced 2,000 cars. BMW budgeted for a standard labor rate of $27 per hour and 1.25 direct labor hours per car. What is the direct labor rate variance for the Rolls-Royce division?
A) $4,000 favorable
B) $15,000 favorable
C) $4,000 unfavorable
D) $15,000 unfavorable
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