Which formula is used to calculate the labour efficiency variance?
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)

Question

Quizplus · Accepted Answer

The formula for labour efficiency variance is (actual hours × standard rate) - (standard hours × standard rate). This calculates the variance between the actual hours worked and the standard hours that should have been worked, multiplied by the standard rate. Option A is the formula for labour rate variance, Option B is incorrect as it does not factor in the standard hours, and Option D is the formula for labour rate variance using actual rate instead of standard rate.

Which Formula Is Used to Calculate the Labour Efficiency Variance