Rae Company reported a $108,000 favorable labor efficiency variance last month. The standard labor
Rate is $12 an hour and the standard labor hours per unit is 60. How many units were produced last
Month, if 45,000 labor hours were actually incurred?
A) 750
B) 900
C) 600
D) 875

Question

Quizplus · Accepted Answer

The labor efficiency variance is calculated as (Standard Hours - Actual Hours) * Standard Rate. Given a favorable variance of $108,000 and a standard rate of $12/hour, we can set up the equation: (Standard Hours - 45,000) * $12 = $108,000. Solving for Standard Hours gives us 54,000 hours. Since the standard labor hours per unit is 60, the number of units produced is 54,000 / 60 = 900 units.

Rae Company Reported a $108,000 Favorable Labor Efficiency Variance Last