Utease Corporation has several production plants nationwide. A newly opened plant in Dubuque produces and sells one product. The plant is treated, for responsibility accounting purposes, as a profit center. The unit standard costs for a production unit, with overhead applied based on direct labor hours, are as follows.

Manufacturing costs (per unit based on expected activity of 18,000 units or 36,000 direct labor hours):

Direct materials (2.5 pounds at $10) $25.00

Direct labor (2.0 hours at $40)80.00

Variable overhead (2.0 hours at $25)50.00

Fixed overhead (2.0 hours at $35)70.00

Standard cost per unit$225.00

Budgeted selling and administrative costs:

Variable$4per unit

Fixed$1,500,000

Expected sales activity: 14,000 units at $380 per unit

Desired ending inventories: 12% of sales

Assume this is the first year of operations for the Dubuque plant. During the year, the company had the following activity.

Units produced17,000

Units sold15,500

Unit selling price$375

Direct labor hours worked33,500

Direct labor costs$1,373,500

Direct materials purchased46,500pounds

Direct materials costs$465,000

Direct materials used46,500pounds

Actual fixed overhead$1,000,000

Actual variable overhead$800,000

Actual selling and administrative costs$ 1,756,000

I need help with determining what I am doing wrong in calculating the labor efficiency variance:

I calculated labor rate variance as: (33,500) and unfavorable which is correct

for labor efficiency variance=Standard Hourly Rate * (Standard Hours - Actual Hours)

= 40 * (36000- 33500)= 40*2500=100,000 (wrong)