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 3,000 units while reporting an unfavorable labor
Efficiency variance of $2,400. How many hours of direct labor were actually used during the month?
A) 6,000
B) 5,800
C) 6,200
D) 7,200

Question

Quizplus · Accepted Answer

The labor efficiency variance is calculated as (Actual Hours - Standard Hours) * Standard Cost per Hour. Given an unfavorable variance of $2,400 and a standard cost per hour of $12, this means that the actual hours exceeded the standard hours by 200 hours (since $2,400 / $12 = 200). The standard hours for 3,000 units at 2 hours per unit is 6,000 hours. Therefore, the actual hours used were 6,000 + 200 = 6,200 hours.

The Following Labor Standards Have Been Provided by the Rand