Saxena Corporation makes a product that has the following direct labor standards: The company budgeted for production of 2,900 units in July, but actual production was 2,800 units. The company used 250 direct labor-hours to produce this output. The actual direct labor rate was $14.10 per hour.
The labor efficiency variance for July is:
A) $450 U
B) $423 F
C) $423 U
D) $450 F

Question

Saxena Corporation makes a product that has the following direct labor standards:  The company budgeted for production of 2,900 units in July, but actual production was 2,800 units. The company used 250 direct labor-hours to produce this output. The actual direct labor rate was $14.10 per hour.
The labor efficiency variance for July is:
A) $450 U 
B) $423 F 
C) $423 U 
D) $450 F

Quizplus · Accepted Answer

SH = 2,800 units × 0.10 hours per unit = 280 hours
Labor efficiency variance = (AH − SH) × SR
= (250 hours − 280 hours) × $15.00 per hour
= (-30 hours) × $15.00 per hour
= $450 F

Saxena Corporation Makes a Product That Has the Following Direct