EKPN Co.produces wooden boxes.The company's standards per box require 6 boards, each costing $10 per board, and half of an hour of direct labour.The standard labour rate is $15 per hour.In August, EKPN Co.Purchased 12,000 boards for a total cost of $123,000.It used 11,500 boards to manufacture 1,900 boxes.Total labour hours were 1,000 hours, and total labour costs were $16,250. What was the labour quantity variance for August?
A)$750 F
B)$750 U
C)$13,500 F
D)$13,500 U

Question

Quizplus · Accepted Answer

To find the labour quantity variance, we need to compare the actual hours worked with the standard hours allowed for the number of units produced. The standard hours allowed are calculated as follows:

Standard hours allowed = Standard hours per unit × Actual units produced
Standard hours per unit = 0.5 hours
Actual units produced = 1,900 boxes
Standard hours allowed = 0.5 × 1,900 = 950 hours

The labour quantity variance is then calculated as follows:

Labour quantity variance = (Actual hours worked - Standard hours allowed) × Standard labour rate
Actual hours worked = 1,000 hours
Standard labour rate = $15 per hour
Labour quantity variance = (1,000 - 950) × $15 = $750 U (Unfavorable)

Therefore, the best answer is B, $750 U, as it is the correct calculation of the labour quantity variance for August.

EKPN CoProduces Wooden Boxes