Question

Sheffield has a standard of 2 hours of labor per unit, at $12 per hour. In producing 3600 units, Sheffield used 6900 hours of labor at a total cost of $84180. Sheffield's total labor variance is

Answer 1

Based on the standard labor hours to Sheffield and the cost per unit of labor, the total labor variance is $3,600 Favorable.

What is Sheffield's labor variance?

This can be found as:
=  (Standard Labor Hours - Actual Labor Hours) x standard Labor Rate

Solving gives:

= ((3,600 x 2) - 6,900) x 12

= (7,200 - 6,900) x 12

= $3,600 Favorable

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