Asked by Sophia Michelle on May 07, 2024
Verified
The labor efficiency variance is:
A) $4,000 F
B) $4,125 F
C) $4,125 U
D) $4,000 U
Labor Efficiency Variance
The deviation between the actual hours taken to produce a unit of output and the standard hours expected, multiplied by the standard labor rate.
- Understand how to calculate labor efficiency variance.
- Characterize the differences between favorable (F) and unfavorable (U) variances.
Verified Answer
MM
Michael MutindaMay 09, 2024
Final Answer :
D
Explanation :
SH = 1,000 units × 2.00 hours per unit = 2,000 hours
Labor efficiency variance = (AH − SH)× SR
= (2,500 hours − 2,000 hours)× $8.00 per hour
= (500 hours)× $8.00 per hour
= $4,000 U
Reference: CH09-Ref43
Bulluck Corporation makes a product with the following standard costs:
The company reported the following results concerning this product in July. 
The company applies variable overhead on the basis of direct labor-hours.The direct materials purchases variance is computed when the materials are purchased.
Labor efficiency variance = (AH − SH)× SR
= (2,500 hours − 2,000 hours)× $8.00 per hour
= (500 hours)× $8.00 per hour
= $4,000 U
Reference: CH09-Ref43
Bulluck Corporation makes a product with the following standard costs:
The company reported the following results concerning this product in July. The company applies variable overhead on the basis of direct labor-hours.The direct materials purchases variance is computed when the materials are purchased.
Learning Objectives
- Understand how to calculate labor efficiency variance.
- Characterize the differences between favorable (F) and unfavorable (U) variances.