Baxter Company incurred labor costs of $10,800 in June (payable in July)for work requiring 1,100 standard hours at a standard rate of $10 per hour;1,200 actual direct labor hours were worked.Based on this information,what was the labor efficiency variance?
A)$200 favorable.
B)$1,200 favorable.
C)$1,000 favorable.
D)$1,000 unfavorable.
E)None of the answer choices is correct.

Question

Quizplus · Accepted Answer

To calculate labor efficiency variance, we need to find the difference between actual hours worked and standard hours allowed, multiplied by the standard labor rate. 
Standard hours allowed: 1,100 
Actual hours worked: 1,200 
Difference: 1,200 - 1,100 = 100 
Standard labor rate: $10 per hour 
Labor efficiency variance = (Actual hours worked - Standard hours allowed) x Standard labor rate 
= (1,200 - 1,100) x $10 
= $1,000 unfavorable

Baxter Company Incurred Labor Costs of $10,800 in June (Payable