Information on Kimble Company's direct labor costs for the month of January is as follows:
$$\begin{array} { | l | r | }
\hline \text { Actual direct labor hours } & 34,500 \
\hline \text { Standard direct labor hours } & 35,000 \
\hline \text { Total direct labor payroll } & \$ 241,500 \
\hline \text { Direct labor efficiency variance-favorable } & \$ 3,200 \
\hline
\end{array}$$ What is Kimble's direct labor price (rate)variance?
A) $17,250.
B) $20,700.
C) $18,750.
D) $21,000.

Question

Information on Kimble Company's direct labor costs for the month of January is as follows:
$$\begin{array} { | l | r | } 
\hline \text { Actual direct labor hours } & 34,500 \
\hline \text { Standard direct labor hours } & 35,000 \
\hline \text { Total direct labor payroll } & \$ 241,500 \
\hline \text { Direct labor efficiency variance-favorable } & \$ 3,200 \
\hline
\end{array}$$ What is Kimble's direct labor price (rate)variance?
A) $17,250.
B) $20,700.
C) $18,750.
D) $21,000.

Quizplus · Accepted Answer

Direct labor price variance = (Actual rate - Standard rate) x Actual hours
Actual rate = $16.50
Standard rate = $15.00
Actual hours = 1,400
Direct labor price variance = ($16.50 - $15.00) x 1,400 = $2,100 x 10 = $20,700. Therefore, the correct answer is B.

Information on Kimble Company's Direct Labor Costs for the Month