Shia Company makes a product that is expected to require 2 hours of labor per unit of product.The standard cost of labor is $5.20.Shia actually used 2.1 hours of labor per unit of product.The actual cost of labor was $5.30 per hour.Shia made 1,000 units of product during the period.Based on this information alone,the labor price variance is:
A) $200 unfavorable.
B) $200 favorable.
C) $210 favorable.
D) $210 unfavorable.

Question

Quizplus · Accepted Answer

First, let's calculate the standard labor cost per unit:
2 hours of labor x $5.20 per hour = $10.40

Then, let's calculate the actual labor cost per unit:
2.1 hours of labor x $5.30 per hour = $11.13

Now, we can calculate the labor price variance using the formula:

Labor Price Variance = (Actual Labor Rate - Standard Labor Rate) x Actual Hours of Labor

Labor Price Variance = ($5.30 - $5.20) x 2.1 hours = $0.21 unfavorable per unit

To calculate the total labor price variance, we need to multiply the labor price variance per unit by the number of units produced:

Total Labor Price Variance = $0.21 x 1,000 units = $210 unfavorable

Therefore, the correct answer is D, $210 unfavorable.

Shia Company Makes a Product That Is Expected to Require