Solly Corporation produces a product for national distribution. Standards for the product are: Materials: 12 ounces per unit at 60¢ per ounce.
Labor: 2 hours per unit at $8 per hour.
During the month of December, the company produced 1,000 units. Information for the month follows:
Materials: 14,000 ounces purchased and used at a total cost of $7,700.
Labor: 2,500 hours worked at a total cost of $20,625.
The labor efficiency variance is:

Question

Quizplus · Accepted Answer

SH = 1,000 units × 2.00 hours per unit = 2,000 hours
Labor efficiency variance = (AH − SH) × SR
= (2,500 hours − 2,000 hours) × $8.00 per hour
= (500 hours) × $8.00 per hour
= $4,000 U

Solly Corporation Produces a Product for National Distribution