Figure 2
Rax Company has developed the following standards for one of its products:
The following activities occurred during the month of October:
The company records materials price variances at the time of purchase.

-Refer to Figure 2. Rax's labour efficiency variance would be
A) £4,300 unfavorable
B) £4,300 favorable
C) £1,800 unfavorable
D) £1,800 favorable

Question

Figure 2
Rax Company has developed the following standards for one of its products:
The following activities occurred during the month of October:
  The company records materials price variances at the time of purchase.
 
-Refer to Figure 2. Rax's labour efficiency variance would be
A) £4,300 unfavorable 
B) £4,300 favorable 
C) £1,800 unfavorable 
D) £1,800 favorable

Quizplus · Accepted Answer

Labour efficiency variance = Actual hours worked x (Standard rate - Actual rate)
= 23,000 x (£30 - £35)
= £1,800 unfavorable (as actual rate is higher than standard rate)

Figure 2 Rax Company Has Developed the Following Standards for One of One