Question

Hassock Corp. produces woven wall hangings. It takes 4 hours of direct labor to produce a single wall hanging. Hassock standard labor cost is $17 per hour. During August, Hassock produced 11,900 units and used 48,180 hours of direct labor at a total cost of $815,860. What is Hassocks labor efficiency variance for August

Answer 1

Efficiency variance =$9,860 unfavorable

Step-by-step explanation:

Labour efficiency variance is the difference between the actual time taken to achieve a given production output less the standard hours allowed for same multiplied by the standard labour rate

Hours

11,900 units should have take (11,900× 4hrs) 47,600

but did take 48,180

Difference 580 unfavorable

Standard hours × $17

Efficiency variance $9,860 unfavorable