Bartels Corp. produces woodcarvings. It takes 2 hours of direct labor to produce a carving. Bartels' standard labor cost is $12 per hour. During August, Bartels produced 10,000 carvings and used 21,040 hours of direct labor at a total cost of $250,376. What is Bartels' labor efficiency variance for August?

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Quizplus · Accepted Answer

The labor efficiency variance is calculated as (Actual hours - Standard hours) x Standard rate. Standard hours for 10,000 carvings = 10,000 x 2 = 20,000 hours. Actual hours = 21,040. Variance = (21,040 - 20,000) x $12 = $12,480 unfavorable.