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The following labor standards have been established for a particular product: Standard labor-hours per unit of output 8.7 hours Standard labor rate $ 18.10 per hour The following data pertain to operations concerning the product for the last month: Actual hours worked 3,800 hours Actual total labor cost $ 67,640 Actual output 500 units What is the labor efficiency variance for the month?

Respuesta :

Answer:

$9,955 Favorable

Explanation:

The computation of labor efficiency variance is shown below:-

Actual Hours = 3,800 Hours

Standard Hours = 500 × 8.7

= 4,350 Hours

Standard Rate = $18.10

Labor Efficiency Variance = (Actual hours – Standard hours) × Standard rate

= (3,800 – 4,350) × $18.10

= $9,955 Favorable

So, for computing the labor efficiency variance we simply applied the above formula.

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