The standard costs and actual costs for direct labor in the manufacture of 2,500 units of product are as follows: Standard Costs
Direct labor
7,500 hours @ $11.80
Actual Costs
Direct labor
7,400 hours @ $11.40
The direct labor time variance is
A) $1,180 favorable
B) $1,140 unfavorable
C) $1,180 unfavorable
D) $1,140 favorable

Question

Quizplus · Accepted Answer

The direct labor time variance is the difference between the standard hours allowed for production and the actual hours worked, multiplied by the standard hourly rate. In this case, the standard hours allowed for production are 7,500 hours, the actual hours worked are 7,400 hours, and the standard hourly rate is $11.80. Therefore, the direct labor time variance is (7,500 hours - 7,400 hours) x $11.80 = $1,180 favorable.

The Standard Costs and Actual Costs for Direct Labor in the Manufacture