Lalas Company uses the following rule to determine whether labor efficiency variances should be investigated: A labor efficiency variance will be investigated when the variance is greater than either $100 or 10% of the standard labor cost. During September, the company used 500 direct labor hours at a rate of $15 per hour. Its standard rate is 475 direct labor hours at a rate of $14.50 per hour. A. Determine the company's labor efficiency variance and whether it is favorable or unfavorable. B. Should the variance be investigated?

Principles of Accounting Volume 2
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ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter8: Standard Costs And Variances
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Lalas Company uses the following rule to determine whether labor efficiency
variances should be investigated:
A labor efficiency variance will be investigated when the variance is greater
than either $100 or 10% of the standard labor cost.
During September, the company used 500 direct labor hours at a rate of $15
per hour. Its standard rate is 475 direct labor hours at a rate of $14.50 per
hour.
A. Determine the company's labor efficiency variance and whether it is
favorable or unfavorable.
B. Should the variance be investigated?
Transcribed Image Text:Lalas Company uses the following rule to determine whether labor efficiency variances should be investigated: A labor efficiency variance will be investigated when the variance is greater than either $100 or 10% of the standard labor cost. During September, the company used 500 direct labor hours at a rate of $15 per hour. Its standard rate is 475 direct labor hours at a rate of $14.50 per hour. A. Determine the company's labor efficiency variance and whether it is favorable or unfavorable. B. Should the variance be investigated?
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