The following labor standards have been established for a particular product:
Standard labor-hours per unit of output is 5.0 hours and standard labor rate is $19.85 per hour.
The following data pertain to operations concerning the product for the last month:
Actual hours worked is 7,300 hours and actual total labor cost is $148,190 and actual output is 1,400 units.
What is the labor efficiency variance for the month?
Selected: a. $5,955 U This answer is correct.
b. $9,240 U
c. $9,240 F
d. $6,090 U
Correct! SH is 5.0 times 1,400 which is 7,000. Direct labor efficiency variance is the difference between $19.85 times 7,300 and $19.85 times 7,000 which totals $5,955 unfavorable.