Direct Labor Efficiency Variance?

Question

What would cause a direct labor efficiency variance?

Answer 1

direct labor efficiency variance = (Std Hr - Act Hr) x Std Cost

As long as the actual hours taken to produce the units are different from the standard hours expected to produce that no. of units, you'll come up with a direct labor efficiency variance. If Actual hrs > Std hrs, the variance is Unfavorable; if Std hrs > Actual hrs, the variance is Favorable.