The Russell Company provides the following standard cost data per unit of product: $\begin{array}{lrr}
\text {Direct material (3 gallons @ \$6 per gallon) } &\$18.00\
\text {Direct labor (2 hours@\$10per hour) } &\$20.00\
\end{array}$

During the period,the company produced and sold 22,000 units,incurring the following costs:
$\begin{array}{llll}
\text { Direct material } & 68,00 \text { Cgallons } & @ & \$ 5.90 \text { per gallon } \
\text { Direct labor } & 45,500 \text { hours } & @ & \$ 9.75 \text { per hour }
\end{array}$
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: $\begin{array}{lrr}
  \text {Direct material (3 gallons @ \$6 per gallon)  } &\$18.00\
 \text {Direct labor (2 hours@\$10per hour)  } &\$20.00\
\end{array}$

During the period,the company produced and sold 22,000 units,incurring the following costs:
$\begin{array}{llll}
\text { Direct material } & 68,00 \text { Cgallons } & @ & \$ 5.90 \text { per gallon } \
\text { Direct labor } & 45,500 \text { hours } & @ & \$ 9.75 \text { per hour }
\end{array}$
 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 (Actual Rate - Standard Rate) x Actual Hours = ($9.75 - $10.00) x 45,500 = -$0.25 x 45,500 = -$11,375, which is favorable since the actual rate is less than the standard rate.

The Russell Company Provides the Following Standard Cost Data Per