Standard labor hours per unit of output: 2

Economics Sep 04, 2020

Standard labor hours per unit of output: 2.8
standard labor rate per hour: 11.50

operations for the last month:
actual hours worked: 6900
actual total labor cost: 80,385
actual output: 2300 units

What is the labor variance for the month?

What is the labor efficiency rate for the month?

Expert Solution

Direct labor rate variance = Actual direct labor-hrs x(Actual rate/hr - Standard rate/hr)
=6900*(80385/6900-11.50)=1035
Direct labor efficiency variance = Standard rate/hr x (Actual number of hrs -standard quantity allowed)
=11.50*(6900-2.8*2300)=5290

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