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Labor Efficiency Variance

The following data pertain to Nell Company's operations for June:

Standard quantity of materials per unit of product 5 pounds
Standard cost of materials per pound $0.20
Standard direct labor hours 0.04 hours
Standard wage rate per hour $7.00
Actual output 100,000 units
Materials purchased 100,000 pounds
Actual cost of materials purchased per pound $0.17
Materials used 60,000 pounds
Actual direct labor hours required 3,900 hours
Actual direct labor cost per hour $7.20

The materials price variance is recognized when materials are purchased.
Reference: 10-5

Nell's labor efficiency variance for June was:

$780 unfavorable
$700 favorable
$780 favorable
$700 unfavorable

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Solution Summary

This provides the steps to calculate the labor efficiency variance