Answer (A) is correct . The labor efficiency variance is $980 ($9,800 – $8,820). It is the difference between actual and standard hours multiplied by the standard labor rate.
Answer (B) is incorrect because The labor rate variance is $200. It is the difference between the actual and standard rates time the actual hours.
Answer (C) is incorrect because The volume variance is the difference between budgeted fixed overhead and the amount applied based on the standard input allowed for the actual output.
Answer (D) is incorrect because The term “spending variance” is usually applied to overhead variances.
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What variance was $980?
