Answer:
Labor efficiency variance = $5,760 (Favorable)
Explanation:
We know,
Labor efficiency variance = (Standard hour - Accrual hour) × Standard rate
Given,
Accrual hour = 2,400
Standard hour = Budgeted direct manufacturing labor hours × Actual units produced
or, Standard hour = 0.22 × 12,000
Standard hour = 2,640 hours.
Standard rate = $24.
Putting the values into the formula, we can get
Labor efficiency variance = (2,640 - 2,400) hours × $24
Labor efficiency variance = 240 × $24
Labor efficiency variance = $5,760 (Favorable)
As standard hours is higher then actual hours, it is a favorable situation.
