The following information relates to the direct labor at Padmaja Manufacturing, Inc. for March: During March, Padmaja produced 2,100 units. What is Padmaja's labor efficiency variance for March?
A) $1,575 Favorable
B) $2,625 Unfavorable
C) $3,675 Unfavorable
D) $3,780 Unfavorable

Question

The following information relates to the direct labor at Padmaja Manufacturing, Inc. for March:  During March, Padmaja produced 2,100 units. What is Padmaja's labor efficiency variance for March?
A) $1,575 Favorable 
B) $2,625 Unfavorable 
C) $3,675 Unfavorable 
D) $3,780 Unfavorable

Quizplus · Accepted Answer

Labor efficiency variance = (AH - SH) × SR
= [(2,100 units × 1.5 hours per unit) - (2,100 units × 1.4 hours per unit)] × $17.50 per hour
= [(3,150 hours) - (2,940 hours)] × $17.50 per hour
= [210 hours] × $17.50 per hour
= $3,675 U

The Following Information Relates to the Direct Labor at Padmaja