Kensington Company's direct labor costs for the current month were as follows: Total actual direct labor cost $126,000 Labor rate variance, favorable $4,000 Actual hours worked 20,000 Standard hours 21,000 What is the labor efficiency variance? $ _____________
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Kensington Company's direct labor costs for the current month were as follows:
Total actual direct labor cost $126,000
Labor rate variance, favorable $4,000
Actual hours worked 20,000
Standard hours 21,000
What is the labor efficiency variance? $ _____________
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