Question

He following labor standards have been established for a particular product: Standard labor-hours per unit of output 10.1 hours Standard labor rate $ 13.90 per hour The following data pertain to operations concerning the product for the last month: Actual hours worked 7,900 hours Actual total labor cost $ 106,650 Actual output 1,100 units

What is the labor efficiency variance for the month?
a. $47,779 F
b. $47,779 U
c. $43,335 F
d. $44,619 F

Answer 1

d. $44,619 Favorable

Step-by-step explanation:

Given the above information, labor efficiency variance is computed as;

= (Standard quantity - Actual quantity) × Standard rate

Standard quantity = 10.1 × 1,100 = 11110

Actual quantity = 7,900

Standard rate = $13.9

Then,

Labor efficiency variance =

(11,110 - 7,900) × $13.90

= (3,210) × $13.90

= $44,619 favorable