Ancona and Flight Limited's direct labour budget for September 20X3 comprised 2.3 labour hours at a rate of £9.75 per unit.The actual sales and production level for the month was 1850 units.The actual labour rate paid was £9.95 and each unit actually required, on average, an input of 2.6 labour hours. What was the labour efficiency variance for September?

Question

Quizplus · Accepted Answer

The labour efficiency variance is calculated as (Standard hours for actual production - Actual hours worked) x Standard rate. Standard hours for actual production = 1850 units x 2.3 hours = 4255 hours. Actual hours worked = 1850 units x 2.6 hours = 4810 hours. The variance = (4255 - 4810) x £9.75 = -£5411.25, which is adverse (A).

Ancona and Flight Limited's Direct Labour Budget for September 20X3