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16 October, 06:06

Hassock Corp. produces woven wall hangings. It takes 4 hours of direct labor to produce a single wall hanging. Hassock standard labor cost is $17 per hour. During August, Hassock produced 11,900 units and used 48,180 hours of direct labor at a total cost of $815,860. What is Hassocks labor efficiency variance for August

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  1. 16 October, 09:02
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    Efficiency variance = $9,860 unfavorable

    Explanation:

    Labour efficiency variance is the difference between the actual time taken to achieve a given production output less the standard hours allowed for same multiplied by the standard labour rate

    Hours

    11,900 units should have take (11,900 * 4hrs) 47,600

    but did take 48,180

    Difference 580 unfavorable

    Standard hours * $17

    Efficiency variance $9,860 unfavorable
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