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# Computing Labor Rate and Efficiency Variances

6. The following labor standards have been established for a particular product:
Standard labor hours per unit of output......0.3 hours
Standard labor rate..................................\$15.50 per hour

The following data pertain to operations concerning the product for the last month:
Actual hours worked.........3800
Actual total labor cost.....\$59,470
Actual output.......... 12,800 units

Required: a. What is the labor rate variance for the month? b. What is the labor efficiency variance for the month

#### Solution Preview

a. What is the labor rate variance for the month?

Actual rate per hour = Actual total labor cost/Actual hours worked
Actual rate per hour = \$59,470/3,800
Actual rate per hour = \$15.65

Labor rate variance = (Actual hours*actual rate per hour) -(Actual hours*Standard rate per hour)
Labor ...

#### Solution Summary

This solution illustrates how to compute a labor rate and labor efficiency variances.

\$2.19