Reference: 21_05
A job was budgeted to require three hours of labor per unit at $8 per hour. The job consisted of 8,000 units and was completed in 22,000 hours at a total labor cost of $198,000.
-What is the total labor efficiency variance?
A) $22,000 unfavorable
B) $16,000 unfavorable
C) $6,000 unfavorable
D) $16,000 favorable
E) $22,000 favorable

Question

Quizplus · Accepted Answer

The total labor efficiency variance is the difference between the actual labor cost and the budgeted labor cost. The budgeted labor cost is $8 per hour * 3 hours per unit * 8,000 units = $192,000. The actual labor cost is $198,000. Therefore, the total labor efficiency variance is $198,000 - $192,000 = $6,000 unfavorable.

Reference: 21_05 A Job Was Budgeted to Require Three Hours of Labor