What is the amount of variance that is attributed to the change in labor productivity? Use the following data to calculate the variances.
The following information has been prepared for a home health agency.
Budget Actual
Wage Rate per Hour $16.00 $17.00
Fixed Hours 320 320
Variable Hours per Relative Value Unit 1.0 1.1
Relative Value Units (RVUs) 1,000 1,200
Total Labor Hours 1,320 1,640
Labor Costs $21,120 $27,880
Cost per RVU $21.12 $23.23
Budgeted costs at actual volume would be $25,344 ($21.12 × 1,200), and the total variance to be explained is $2,536 Unfavorable ($27,880 - $25,344). Be sure to specify whether the variance is favorable or unfavorable.