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      Question

      Labor efficiency variance is a key performance metric in

      cost accounting that measures the difference between the actual labor hours worked and the standard labor hours allowed for the actual production. This variance helps businesses assess how efficiently labor resources are being utilized. During a period 17,500 labour hours were worked at a standard cost of Rs 6.50 per hour. The labour efficiency variance was Rs 7,800 favourable. How many standard hours were produced?
      A 1,200 Correct Answer Incorrect Answer
      B 16,300 Correct Answer Incorrect Answer
      C 17,500 Correct Answer Incorrect Answer
      D 18,700 Correct Answer Incorrect Answer
      E 19,000 Correct Answer Incorrect Answer

      Solution

      Labor Efficiency Variance=(Standard Hours−Actual Hours)×Standard Cost per Hour 7,800 = (Standard Hours−17,500) × 6.50 Standard hours produced is 18,700.

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