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Question 6 Annapolis Company completes job #601 which has a standard of 630 labor hours at...

Question 6

Annapolis Company completes job #601 which has a standard of 630 labor hours at a standard rate of $18.10 per hour. The job was completed in 520 hours and the average actual labor rate was $18.90 per hour. What is the labor efficiency (quantity) variance? A negative number indicates an favorable variance and a positive number indicates an unfavorable variance.

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Answer #1

Job #601

Standard Labour Hours = 630 Actual Labour Hours =520

Standard Labour Rate = $18.10 Actual Labour Rate = $18.90

Labour Efficiency (quantity) variance = Standard Labour Rate (Standard Labour Hour - Actual Labour Hour)

= $18.10 (630 - 520) = $18.10*110 = $1,991

As per the given statement in question, A negative number indicates an favorable variance and a positive number indicates an unfavorable variance.

Since the variance is positive number, it indicates an unfavourable variance.

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