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4 May, 07:46

The following information relates to the direct labor at Padmaja Manufacturing, Inc. for March: Actual Standard Labor cost per hour $18.00 $17.50 Labor hours per unit produced 1.5 1.4 During March, Padmaja produced 2,100 units. What is Padmaja's labor efficiency variance for March? $1,575 Favorable $2,625 Unfavorable Correct! $3,675 Unfavorable $3,780 Unfavorable None of the above

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  1. 4 May, 09:09
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    The correct answer is C.

    Explanation:

    Giving the following information:

    Actual:

    Cost per hour=18

    Labor hours per unit = 1.5

    Standard:

    Labor cost per hour = $17.50

    Labor hours per unit = 1.4

    During March, Padmaja produced 2,100 units.

    To calculate the labor efficiency variance we need to use the following formula:

    Direct labor efficiency variance = (Standard Quantity - Actual Quantity) * standard rate

    Direct labor efficiency variance = (2,100*1.4hours - 2,100*1.5 hours) * 17.50

    Direct labor efficiency variance = $3,675 unfavorable
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