The following labor standards have been established for a particular product: Standard labor-hours per unit of output 10 hours Standard labor rate $ 13.80 per hour The following data pertain to operations concerning the product for the last month: Actual hours worked 7,800 hours Actual total labor cost $ 104,520 Actual output 1,050 units What is the labor efficiency variance for the month?

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Business

Zara

22 May, 07:04

The following labor standards have been established for a particular product: Standard labor-hours per unit of output 10 hours Standard labor rate $ 13.80 per hour The following data pertain to operations concerning the product for the last month: Actual hours worked 7,800 hours Actual total labor cost $ 104,520 Actual output 1,050 units What is the labor efficiency variance for the month?

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Alexis Escobar · Answer 1

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