Question

Tout Corporation makes a product that has the following direct labor standards:

Standard direct labor-hours	0.1	hours per unit
Standard direct labor rate	$22.00	per hour
Standard cost	$2.20	per unit

The company budgeted for production of 6,400 units in October, but actual production was 6,500 units. The company used 610 direct labor-hours to produce this output. The actual direct labor rate was $21.80 per hour.

The labor efficiency variance for October is:

$880 F

$872 F

$880 U

$872 U

Answer 1

• Correct Answer = Option #1: $ 880 F

Labour Efficiency Variance
(	Standard Hours = 6500 actual units x 0.1 std hrs per unit	-	Actual Hours	)	x	Standard Rate
(	650	-	610	)	x	$                        22.00
	880
	Variance		$                  880.00			Favourable-F

answered by: anonymous