Answer (A) is correct . The labor efficiency variance is the standard cost per hour times the difference between standard and actual hour. The standard labor rate is $50 per hour, and the standard time allowed for 9,500 articles is 190,000 hours (9,500 ¡Á 20). Actual hours worked totaled 192,000. Thus, an unfavorable variance of 2,000 hours occurred. The unfavorable labor efficiency variance is therefore $100,000 (2,000 hours ¡Á $50).Answer (B) is incorrect because The difference between the standard labor cost ($9,500,000) and total actual (fixed + variable) cost ($9,738,000) is $238,000.
Answer (C) is incorrect because The variance is unfavorable.
Answer (D) is incorrect because The efficiency variance is based on standard hours for actual production levels--in this case, 190,000 hours.
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Zazoo’s labor efficiency variance for the year is