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 price variance?
A)$1,250 U
B)$1,250 F
C)$4,250 F
D)$4,250 U

Question

Quizplus · Accepted Answer

The labour price variance is calculated as (Actual Rate - Standard Rate) x Actual Hours. The actual rate is $16,250 / 1,000 hours = $16.25 per hour. The standard rate is $15 per hour. The variance is ($16.25 - $15) x 1,000 = $1,250 Unfavorable (U).

EKPN CoProduces Wooden Boxes