Accounting Multiple Choice Question – 10 April 2023

A company has a standard labour cost for one unit of 8 hours of direct labour at £6 per hour.

In a given period 540 units were produced in 4,300 hours at a total direct labour cost of £26,660.

What is the labour efficiency variance for the period?

Select ONE answer:

1. £120 adverse
2. £120 favourable
3. £860 adverse
4. £860 favourable

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct – 540 units * 8 hours = 4,320 hours – 4,300 actual hours so 20 hours * £6 = £120 favourable
3. Not correct
4. Not correct

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