Question

The following labor standards have been established for a particular product: Standard labor-hours per unit of output 9.2 hours Standard labor rate $ 13.00 per hour The following data pertain to operations concerning the product for the last month: Actual hours worked 7,000 hours Actual total labor cost $ 88,200 Actual output 950 units What is the labor efficiency variance for the month

Answer 1

Answer:

$22,620

Explanation:

Labor efficiency is a key performance indicator that tells how efficient the production time is managed.

labor efficiency variance is the difference between the standard and the actual hours used in production multiplied by the standard labor rate.

Based on the information given in the scenario, the actual production information is

Actual hour : 7000

Actual unit produced : 950

Total labor cost : $88,200

Actual labor rate : $12,6

Actual hr/unit : 7.36hr

Standard information

Labor rate : $13

Standard hr / unit : 9.2hr

Standard hr for 950 units :8740hr

standard cost :$113,620

Labor efficiency variance :( 8740-7000) *$13 = $22,620