Figure 4
Shannon Ltd.'s standard cost card contained the following information:
Direct labour: 1.25 hours x £8.00 per hour = £10.00
Shannon planned to make 12,000 units. Shannon actually made 10,000 units using 13,000 hours.
-Refer to Figure 4. Shannon's labour efficiency variance was
A) £4,625 unfavorable
B) £4,000 unfavorable
C) £27,750 unfavorable
D) £24,000 unfavorable

Question

Quizplus · Accepted Answer

Labour efficiency variance = (Actual hours - Standard hours allowed) x Standard hourly rate
= (13,000 - 12,500) x £8 = £4,000 unfavorable.

Figure 4 Shannon Ltd.'s Standard Cost Card Contained the Following Information