Hofbauer Inc. has provided the following data concerning one of the products in its standard cost system. The company has reported the following actual results for the product for September:
The labor efficiency variance for the month is closest to:
A) $2,940 U
B) $2,940 F
C) $2,996 F
D) $2,996 U

Question

Hofbauer Inc. has provided the following data concerning one of the products in its standard cost system.  The company has reported the following actual results for the product for September:
 The labor efficiency variance for the month is closest to:
A) $2,940 U 
B) $2,940 F 
C) $2,996 F 
D) $2,996 U

Quizplus · Accepted Answer

SH = 5,600 units × 0.30 hours per unit = 1,680 hours
Labor efficiency variance = (AH × SR) − (SH × SR)
= (AH - SH) × SR
= (1,540 hours - 1,680 hours) × $21.00 per hour
= (−140 hours) × $21.00 per hour
= $2,940 F