The following labor standards have been provided by the Rand Company:
Standard hours per unit: 2
Standard cost per hour: $12
During the most recent month Rand produced 2,000 units and used 3,900 labor hours at a cost of $47,580. What was the labor efficiency variance for the month?
A) $1,200 unfavorable
B) $1,220 unfavorable.
C) $1,200 favorable
D) $1,220 unfavorable

Question

Quizplus · Accepted Answer

The labor efficiency variance is calculated as the difference between the actual labor hours used and the standard labor hours allowed, multiplied by the standard labor rate. In this case, the actual labor hours used were 3,900, the standard labor hours allowed were 2,000 units * 2 hours per unit = 4,000 hours, and the standard labor rate was $12 per hour. Therefore, the labor efficiency variance is (3,900 - 4,000) * $12 = $1,200 favorable.

The Following Labor Standards Have Been Provided by the Rand