All 38 Variance Analysis questions
More in Variance Analysis
What is variance analysis? What is the difference between a favorable and an adverse variance? What is a standard cost? What is the total cost variance and how does it relate to the sub-variances? What is a standard costing system? What does an adverse sales price variance indicate? What is a favorable variance a warning sign of sometimes? What is the difference between a budget and a standard? What are the two components of the direct materials variance? What are the two components of the direct labor variance?
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Budgeting & Forecasting › Variance Analysis

What is a standard hour and how is it used in efficiency measurement?

Beginner

Answer

A standard hour is the amount of output that should be produced in one hour under standard efficiency. It converts output into a time measure so diverse products can be compared and efficiency assessed—e.g., producing 100 standard hours of output in 90 actual hours indicates favorable efficiency (working faster than standard).
Real-world example Making 100 standard hours' worth of output in 95 actual hours shows the team beat the efficiency standard.

Common follow-ups: Why express output in standard hours? | How does it show efficiency?

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All 38 Variance Analysis questions