Figure 5
Ebola 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 5. Ebola's labour efficiency variance would be
A) £18,000 favorable
B) £18,000 unfavorable
C) £17,700 unfavorable
D) £17,700 favorable

Question

Figure 5
Ebola 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 5. Ebola's labour efficiency variance would be
A) £18,000 favorable 
B) £18,000 unfavorable 
C) £17,700 unfavorable 
D) £17,700 favorable

Quizplus · Accepted Answer

The labor efficiency variance is calculated as (Actual hours - Standard hours) x Standard rate. If the variance is unfavorable, it means more hours were used than expected, leading to increased costs.

Figure 5 Ebola Company Has Developed the Following Standards for One of One