Question

Wolery Inc. has provided the following data concerning one of the products in its standard cost system. Inputs Standard Quantity or Hours per Unit of Output Standard Price or Rate Direct labor 0.20 hours $21.70 per hour The company has reported the following actual results for the product for April: Actual output 8,800 units Actual direct labor-hours 1,610 hours Actual direct labor rate $ 23.30 per hour The labor efficiency variance for the month is closest to:

Answer 1

Answer: The labor efficiency variance for the month is closest to: $2576

Explanation:

Given:

Actual output 8,800 units

Actual direct labor-hours 1,610 hours

Actual direct labor rate $ 23.30 per hour

The labor efficiency variance for the month is computed as :

The labor rate variance = Actual hours×(Actual rate - Standard rate)

=1610 ×($23.30-$21.70)

=$2576

Answer 2

Answer: $3255 F

Explanation: Efficiency variance is the difference between the quantities taken by the labor and the standard amount of quantities to be taken. It is commonly used to evaluate the performance of the labor. It can be computed as follows :-

Efficiency variance = ( standard hours - actual hours ) * standard rate

                                 = ( 8800 * 0.20 - 1610 ) * 21.70

                                 = $3255 F