The Flapjack Corporation had 8,200 actual direct labor hours at an actual rate of $12.40 per hour. Original production had been budgeted for 1,100 units, but only 1,000 units were actually produced. Labor standards were 7.6 hours per completed unit at a standard rate of $13.00 per hour. Compute the labor time variance.
A) 9,880F
B) 9,880U
C) 7,800U
D) 7,800F

Question

Quizplus · Accepted Answer

First, we need to calculate the standard labor hours for producing 1,000 units:

Standard labor hours = (1,000 units) x (7.6 hours per unit) = 7,600 hours

Next, we can calculate the standard labor cost for 8,200 hours (which is the actual labor hours worked):

Standard labor cost = (8,200 hours) x ($13.00 per hour) = $106,600

Finally, we can calculate the labor time variance:

Labor time variance = Actual labor cost - Standard labor cost
Labor time variance = (8,200 hours) x ($12.40 per hour) - $106,600
Labor time variance = $101,680 - $106,600
Labor time variance = $4,920

Since the actual labor cost is lower than the standard labor cost, the variance is unfavorable or unfavorable. The answer is C) 7,800U.

The Flapjack Corporation Had 8,200 Actual Direct Labor Hours at an Actual