Morgan Company has the following information available for October when 3,000 un

Question

Morgan Company has the following information available for October when 3,000 units are produced:

Standard labor cost per unit

5.0 hours at $10.15 per hour

Actual labor data for October

17,000 labor hours at $10.20 per hour

The labor efficiency variance is:

Morgan Company has the following information available for October when 3,000 units are produced:

Standard labor cost per unit

5.0 hours at $10.15 per hour

Actual labor data for October

17,000 labor hours at $10.20 per hour

The labor efficiency variance is:

Explanation / Answer

Labor efficiency variance = ( standard hours - actual hours) * standard rate                                                     = ( 3000 * 5 - 17000) * 10.15                                                     = 2000 *10.15                                                     = 20300 unfavourable

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