Neil's Service Shop performs routine vehicle maintenance. One such service is tire rotations. Neil's reports the following budgeted and actual amounts for tire rotations for the month of August. What is the labor efficiency variance for the month of August?

Question

Neil's Service Shop performs routine vehicle maintenance. One such service is tire rotations. Neil's reports the following budgeted and actual amounts for tire rotations for the month of August.  What is the labor efficiency variance for the month of August?

Quizplus · Accepted Answer

The formula for labor efficiency variance is: 
(Actual labor hours - Budgeted labor hours) x Standard labor rate. 
Using the numbers from the table, we get: 
(68 - 60) x $15 = $120 unfavorable. 
Therefore, the correct answer is D) $510 unfavorable.

Neil's Service Shop Performs Routine Vehicle Maintenance