Figure 1
Max Company has developed the following standards for one of its products:
The following activities occurred during the month of October:
The company records materials price variances at the time of purchase.

-Refer to Figure 1. Max's labour efficiency variance would be
A) £7,200 unfavorable
B) £7,200 favorable
C) £6,280 unfavorable
D) £6,280 favorable

Question

Figure 1
Max Company has developed the following standards for one of its products:
The following activities occurred during the month of October:
  The company records materials price variances at the time of purchase.
 
-Refer to Figure 1. Max's labour efficiency variance would be
A) £7,200 unfavorable 
B) £7,200 favorable 
C) £6,280 unfavorable 
D) £6,280 favorable

Quizplus · Accepted Answer

Max's labour efficiency variance is unfavorable because the actual labor hours (1,200 hours) exceeded the standard labor hours (1,000 hours) by 200 hours. The labor rate is £36 per hour, so the labor efficiency variance is 200 hours x £36 per hour = £7,200 unfavorable.

Figure 1 Max Company Has Developed the Following Standards for One of One