Question

Hassock Corp. produces woven wall hangings. It takes 4 hours of direct labor to produce a single wall hanging. Hassock standard labor cost is $17 per hour. During August, Hassock produced 11,900 units and used 48,180 hours of direct labor at a total cost of $815,860. What is Hassocks labor efficiency variance for August

Answer 1

Answer:

Efficiency variance  =$9,860   unfavorable

Explanation:

Labour efficiency variance is the difference between the actual time taken to achieve a given production output less the standard hours allowed for same multiplied by the standard labour rate

                                                                                                  Hours

11,900 units should have take (11,900× 4hrs)                          47,600                      

but did take                                                                              48,180

Difference                                                                                   580  unfavorable

Standard hours                                                                     ×   $17

Efficiency variance                                                           $9,860   unfavorable