The following data relate to direct labor costs for February: What is the direct labor time variance?
A) $7,700 favorable
B) $7,700 unfavorable
C) $11,200 unfavorable
D) $11,200 favorable

Question

The following data relate to direct labor costs for February:  What is the direct labor time variance?
A) $7,700 favorable 
B) $7,700 unfavorable 
C) $11,200 unfavorable 
D) $11,200 favorable

Quizplus · Accepted Answer

To calculate the direct labor time variance, you need to use the formula: Direct Labor Time Variance = (Actual Hours - Standard Hours) x Standard Rate. From the given data, the actual hours worked were 18,000, and the standard hours allowed were 15,000. The standard rate per hour is not given, so it is not possible to calculate the exact variance amount. However, we can determine whether it is favorable or unfavorable by looking at the difference between actual and standard hours. The actual hours are higher than the standard hours, which means there was more labor cost incurred than planned. Therefore, the variance is unfavorable. The only answer option that reflects an unfavorable variance is C, $11,200 unfavorable.

The Following Data Relate to Direct Labor Costs for February