Question

the following labor standards have been established for a particular product: standard labor-hours per unit of output 10.3 hours standard labor rate $14.10 per hour the following data pertain to operations concerning the product for the last month: actual hours worked 8,100 hours actual total labor cost $110,970 actual output 900 units what is the labor efficiency variance for the month? the following labor standards have been established for a particular product: standard labor-hours per unit of output 10.3 hours standard labor rate $14.10 per hour the following data pertain to operations concerning the product for the last month: actual hours worked 8,100 hours actual total labor cost $110,970 actual output 900 units what is the labor efficiency variance for the month? $19,737 f $16,029 f $16,497 f $19,737 u

Answer 1

The labor efficiency variance for the month is $16,497 favorable, as the actual hours worked were less than the standard hours for the actual production by 1,170 hours, saving $16,497 in labor costs.

Step-by-step explanation:

The labor efficiency variance is calculated by comparing the standard labor hours that should have been worked for the actual output and the actual hours worked, multiplied by the standard labor rate. First, identify the standard hours for actual production (900 units × 10.3 hours/unit) which equals 9,270 standard hours. Then multiply the difference between standard hours (9,270) and actual hours worked (8,100) by the standard rate ($14.10/hour) to find the variance.

Calculating the figures: (9,270 - 8,100) hours × $14.10 = 1,170 hours × $14.10 = $16,497. Therefore, the labor efficiency variance for the month is $16,497 favorable (F), indicating that the actual labor usage was more efficient than the standard, saving $16,497.