Olette Staines Limited produced and sold 1350 units of their OS211 product in September 20X7.Each unit was budgeted to use 1.5 hours of labour at a standard cost of £11.60 per hour.When the company's management accountant reviewed the records for the month he found that 1.6 labour hours had been used in actual production, at an actual cost of £11.55 per hour. What was the labour efficiency variance for September 20X7?

Question

Quizplus · Accepted Answer

The labour efficiency variance is calculated as (Actual hours - Standard hours) x Standard rate. In this case, the actual hours are 1.6 hours, the standard hours are 1.5 hours, and the standard rate is £11.60 per hour. Therefore, the labour efficiency variance is (1.6 - 1.5) x £11.60 = £1566 (F).

Olette Staines Limited Produced and Sold 1350 Units of Their