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Aruba Factory produces hand-crafted items. During October, 46,000 units of product were manufactured and each unit takes 15 minutes. Line workers are paid $12 per hour. Total labor cost for the month was $135,140 for 11,650 hours. Production budgeted for October was 45,000 units.
-What is the labor efficiency variance?

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Aruba Factory produces hand-crafted items. During October, 46,000 units of product were manufactured and each unit takes 15 minutes. Line workers are paid $12 per hour. Total labor cost for the month was $135,140 for 11,650 hours. Production budgeted for October was 45,000 units.
-What is the labor efficiency variance?

Quizplus · Accepted Answer

Explanation:Standard labor hours = 45,000 units * 15 minutes/unit * 1 hour/60 minutes = 11,250 hoursActual labor hours = 11,650 hoursLabor efficiency variance = (Actual labor hours - Standard labor hours) * Standard labor rate= (11,650 hours - 11,250 hours) * $12 per hour= $400 * $12 per hour= $1,800 unfavorable

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