The Russell Company provides the following standard cost data per unit of product: $\begin{array}{llcc}
\text { Direct material ( 3 gallons @ \$ 6 per gallon) } & \$ 18.00 \
\text {Direct labor ( 2 hours @ \$ 10 per hour) } & \$ 20.00
\end{array}$
During the period,the company produced and sold 22,000 units incurring the following costs: $\begin{array}{llcc}
\text {Direct material } & \text { 68,000 gallons @ \$ 5.90 per gallon } \
\text { Direct labor } &\text { 45,500 hours @ \$ 9.75 per hour }
\end{array}$
The direct labor price variance was:
A) $11,000 unfavorable.
B) $11,000 favorable.
C) $11,375 unfavorable.
D) $11,375 favorable.

Question

The Russell Company provides the following standard cost data per unit of product: $\begin{array}{llcc}
  \text {  Direct material ( 3 gallons @ \$ 6 per gallon)  } & \$ 18.00 \
 \text {Direct labor ( 2 hours @  \$ 10 per hour) } & \$ 20.00
\end{array}$
 During the period,the company produced and sold 22,000 units incurring the following costs: $\begin{array}{llcc}
  \text {Direct material } & \text { 68,000 gallons @  \$ 5.90  per gallon  }  \
 \text { Direct labor  } &\text {  45,500  hours @ \$ 9.75 per hour } 
\end{array}$
 The direct labor price variance was:
A) $11,000 unfavorable.
B) $11,000 favorable.
C) $11,375 unfavorable.
D) $11,375 favorable.

Quizplus · Accepted Answer

The direct labor price variance is calculated as the difference between the actual price paid and the standard price, multiplied by the actual quantity used. In this case, the actual price paid is $9.75 per hour, the standard price is $10 per hour, and the actual quantity used is 45,500 hours. Therefore, the direct labor price variance is:(Actual price - Standard price) x Actual quantity= ($9.75 - $10) x 45,500 hours= -$0.25 x 45,500 hours= -$11,375 unfavorable

The Russell Company Provides the Following Standard Cost Data Per