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
B 16,300
C 17,500
D 18,700
E 19,000
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