Question

The following information relates to the direct labor at Padmaja Manufacturing, Inc. for March: Actual Standard Labor cost per hour $18.00 $17.50 Labor hours per unit produced 1.5 1.4 During March, Padmaja produced 2,100 units. What is Padmaja's labor efficiency variance for March? $1,575 Favorable $2,625 Unfavorable Correct! $3,675 Unfavorable $3,780 Unfavorable None of the above

Answer 1

The correct answer is C.

Step-by-step explanation:

Giving the following information:

Actual:

Cost per hour=18

Labor hours per unit= 1.5

Standard:

Labor cost per hour= $17.50

Labor hours per unit= 1.4

During March, Padmaja produced 2,100 units.

To calculate the labor efficiency variance we need to use the following formula:

Direct labor efficiency variance= (Standard Quantity - Actual Quantity)*standard rate

Direct labor efficiency variance= (2,100*1.4hours - 2,100*1.5 hours)*17.50

Direct labor efficiency variance= $3,675 unfavorable