A labor rate variance equal to zero would mean that the standard labor rate is equal to the actual labor rate which is $16 per direct labor-hour. To recall, the formula for labor efficiency variance is:
Labor efficiency variance = (AH - SH) × SR
Where,
AH = actual number of hours worked = unkown
SH = standard number of hours worked = 850 cranes * 24 hours per crane = 20,400 hours
SR = standard labor rate = $16
Substituting the known values to the equation:
$8,800 = [AH – 20,400 hours] * $16 per hour
$8,800 = [AH - 20,400 hours] * $16 per hour
$8,800 = (AH * $16 per hour) – ($326,400)
AH * $16 per hour = $326,400 + $8,800
AH * $16 per hour = $335,200
AH = $335,200 / $16 per hour
AH = 20,950 hours
