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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 HoursтИТActual Hours)├ЧStandard Cost per Hour 7,800 = (Standard HoursтИТ17,500) ├Ч 6.50 Standard hours produced is 18,700.

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