The labor standard for a product was five hours at a wage rate of $8 per hour.The firm produced 900 units of the item.Labor costs totaled $35,250 and 4,700 hours of labor were used.An analysis of labor costs would indicate

Question

Quizplus · Accepted Answer

- Labor standard for 900 units = 900 units x 5 hours/unit = 4,500 hours
- Actual labor used = 4,700 hours

Labor time variance = Actual labor used - Labor standard
Labor time variance = 4,700 - 4,500
Labor time variance = 200 hours unfavorable

- Wage rate = $8/hour
- Actual labor cost = 4,700 hours x $8/hour = $37,600

Labor rate variance = Actual labor cost - (Labor standard x Wage rate)
Labor rate variance = $37,600 - (4,500 x $8)
Labor rate variance = $37,600 - $36,000
Labor rate variance = $1,600 unfavorable

Therefore, the answer is B, a $1,600 unfavorable labor time variance.

The Labor Standard for a Product Was Five Hours at a Wage