The following data relate to direct labor costs for August: Actual costs: 5,500 hours at $24.00 per hour.Standard costs: 5,000 hours at $23.70 per hour. What is the direct labor time variance?
A)$1,650 favorable
B)$1,650 unfavorable
C)$1,500 favorable
D)$1,500 unfavorable

Question

Quizplus · Accepted Answer

Direct Labor Time Variance = (Actual Hours - Standard Hours) x Standard Rate

Direct Labor Time Variance = (5,500 - 5,000) x $23.70

Direct Labor Time Variance = 500 x $23.70

Direct Labor Time Variance = $11,850

Since the actual costs are higher than the standard costs, the variance is unfavorable. Therefore, the correct answer is B, $1,650 unfavorable.

The Following Data Relate to Direct Labor Costs for August