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.
A. Determine the company's labour efficiency variance and whether it is favourable or unfavourable.
B. Should the variance be investigated?

Question

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.
 A. Determine the company's labour efficiency variance and whether it is favourable or unfavourable.
B. Should the variance be investigated?

Quizplus · Accepted Answer

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.
 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