The labor efficiency variance is calculated by the equation
A) (Standard Hours * Actual Hours) - (Actual Hours * Standard Rate).
B) (Actual Rate * Actual Hours) - (Standard Rate * Actual Hours).
C) (Actual Hours * Standard Rate) - (Standard Hours * Standard Rate).
D) (Standard Hours* Actual Rate) - (Actual Hours * Actual Rate).
E) None of these.

Question

Quizplus · Accepted Answer

The labor efficiency variance is calculated by comparing the standard hours allowed for the actual output with the actual hours taken to produce that output, and multiplying the difference by the standard labor rate per hour. Therefore, the equation for the labor efficiency variance is (Actual Hours × Standard Rate) − (Standard Hours × Standard Rate), which is option C. Options A, B, D, and E are incorrect equations for the labor efficiency variance.

The Labor Efficiency Variance Is Calculated by the Equation