a company has a budgeted labour cost of $360,000 for the production of 60,000 units per month. Each unit is budgeted to take 3 hours of labour
The actual cost during the month was $320,000 for 28,000 units and 85000 hours were worked. What was the labour efficiency variance?
labour efficiency variance= budgeted hours worked - actual hours * actual rate
budgeted hours= 3 hours*28000 units= 84,000 hours
actual hours = 85,000 hours
rate=$320,000/85,000 units=3.76
labour variance= [84,000- 85,000] *3.76=3760
Whats wrong here?
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labour variance
11y ago#1The efficiency variance is costed at the standard cost per hour, not the actual cost.
The standard cost per hour is $2.
how did you calculate the standard cost per hour? can i see the correct calculation for the labour efficiency please?
11y ago#3Since the budget cost is $360,000 for 60,000 units, that is $6 per unit.
Since the budget hours are 3 hours per unit, that means $2 per hour.
The rest of calculation was correct.
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