Question

Annapolis Company completes job #601 which has a standard of 500 labor hours at a standard rate of $20.00 per hour. The job was completed in 590 hours and the average actual labor rate was $19.90 per hour. What is the labor efficiency (quantity) variance? A negative number indicates an favorable variance and a positive number indicates an unfavorable variance.

Answer 1

Answer:

$1,800 Unfavorable

Explanation:

Data given

Actual hours = 590

Standard hours = 500

Standard rate per hour = $20.00

The computation of labor efficiency (quantity) variance is shown below:-

Labor efficiency variance = (Actual hours - Standard hours) × Standard rate per hour

= (590 - 500) × $20.00

= 90 × $20.00

= $1,800 Unfavorable

Therefore for computing the Labor efficiency variance we simply applied the above formula.