Meeds Company uses the following rule to determine whether labour efficiency variances should be investigated:
A labour efficiency variance will be investigated when the variance is greater than either $100 or 10% of the standard labour cost.
During March, the company used 525 direct labour hours at a rate of $16 per hour. Its standard rate is 500 direct labour hours at a rate of $15.50 per hour.
Required:
A. Determine the company's labour efficiency variance and whether it is favourable or unfavourable.
B. Should the variance be investigated?

Question

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The Answer of Meeds Company uses the following rule to determine whether labour efficiency variances should be investigated:
A labour efficiency variance will be investigated when the variance is greater than either $100 or 10% of the standard labour cost.
During March, the company used 525 direct labour hours at a rate of $16 per hour. Its standard rate is 500 direct labour hours at a rate of $15.50 per hour.
Required:
A. Determine the company's labour efficiency variance and whether it is favourable or unfavourable.
B. Should the variance be investigated?

Meeds Company Uses the Following Rule to Determine Whether Labour