• Bruce incurred actual direct labor costs of $14,040 in March.

• Standard hourly Labor rate $13

• The standard labor cost allowed for manufacturing 600 beams is only $11,700 (600 units

  1.5 hours per unit $13 per hour).

• Thus, the company is faced with an unfavorable labor variance of $2,340 ($11,700

  $14,040).

• Timecards show that 2,075 Actual direct labor hours were used in March.

• The average wage rate for the month was $14per hour. (Actual rate = $14

1. Compute the labor efficiency variance

Given that 2,075 hours were actually required, the companys unfavorable labor efficiency variance for March is computed as follows.

Labor Efficiency Variance = Standard Hourly labor Rate (Standard labor Hours Actual Direct labor Hours)