Marnie Company reported a $9,600 unfavorable labor efficiency variance last month. The standard
Labor rate is $8 an hour and the standard labor hours per unit is 10. How many units were produced
Last month if 12,000 labor hours were actually incurred?

Question

Quizplus · Accepted Answer

The labor efficiency variance is calculated as (Actual Hours - Standard Hours) x Standard Rate. Given the unfavorable variance of $9,600 and a standard rate of $8, the difference in hours is 1,200 hours (9,600 / 8). Therefore, the standard hours should have been 12,000 - 1,200 = 10,800 hours. Since the standard labor hours per unit is 10, the number of units produced is 10,800 / 10 = 1,080 units.

Marnie Company Reported a $9,600 Unfavorable Labor Efficiency Variance Last