Question

The following labor standards have been established for a particular product: Standard labor-hours per unit of output 9.4 hours Standard labor rate $ 13.20 per hour The following data pertain to operations concerning the product for the last month: Actual hours worked 7,200 hours Actual total labor cost $ 92,160 Actual output 1,050 units What is the labor efficiency variance for the month

Answer 1

the labor efficiency variance is $35,244 favorable

Step-by-step explanation:

The computation of the labor efficiency variance is shown below:

As we know that

Efficiency Variance is

= Standard rate × (Standard hours - Actual Hours)

= $13.20 × (9.4 ×1,050 units - 7,200 hours)

= $13.20 × (9,870 hours - 7,200 hours)

= $35,244 favorable

hence, the labor efficiency variance is $35,244 favorable