Question

The following labor standards have been established for a particular product: Standard labor-hours per unit of output 9.9 hours Standard labor rate $13.70 per hour The following data pertain to operations concerning the product for the last month: Actual hours worked 7,700 hours Actual total labor cost $102,410 Actual output 1,000 units What is the labor efficiency variance for the month

Answer 1

Answer:

-$30,250 favorable

Explanation:

labor efficiency variance = (standard quantity - actual quantity) x standard labor cost

• actual quantity = 7,700 hours
• standard quantity = 9.9 hours x 1,000 units = 9,900
• standard labor cost = $13.70

labor efficiency variance = (7,700 - 9,900) x $13.70 = -$30,250 favorable variance

the variance is favorable, because less hours were actually used than forecasted