The following labour standards have been established for a particular product:$\begin{array}{ll}
\text { Standard labour hours per unit of output }&8.10 \text { hours }\
\text { Standard labour rate }&£ 14.40 \text { per hour }
\end{array}$

The following data pertain to operations concerning the product for the last month:Actual hours worked $\quad 8,700$ hours
Actual total labour cost $£ 129,195$
Actual output $\quad $ $\quad $ $\quad $1,000 units
-
What is the labour efficiency variance for the month

A)£8,910 U
B)£12,555 F
C)£12,555 U
D)£8,640 U

Question

The following labour standards have been established for a particular product:$\begin{array}{ll}
\text { Standard labour hours per unit of output }&8.10 \text { hours }\
\text { Standard labour rate }&£ 14.40 \text { per hour }
\end{array}$
 
The following data pertain to operations concerning the product for the last month:Actual hours worked $\quad 8,700$ hours
Actual total labour cost $£ 129,195$
Actual output $\quad $ $\quad $ $\quad $1,000 units
-
What is the labour efficiency variance for the month

A)£8,910 U
B)£12,555 F
C)£12,555 U
D)£8,640 U

Quizplus · Accepted Answer

The labour efficiency variance is calculated as (Actual hours - Standard hours) * Standard rate. Standard hours for actual output = 1,000 units * 8.10 hours/unit = 8,100 hours. Actual hours = 8,700 hours. Variance = (8,700 - 8,100) * £14.40 = 600 * £14.40 = £8,640 Unfavorable.

The Following Labour Standards Have Been Established for a Particular