Scenesay Ltd Is a Capital Intensive Firm The Direct Labour Price Variance Was:
A) $40,000 F
B)

Scenesay Ltd is a capital intensive firm. Indirect costs make up nearly 70% of the product costs. The company has no direct material costs because customers provide the direct materials used for each job. To plan and control such costs, the firm employs flexible budgets and standard costs. Overhead rates, based on direct labour hours, are derived from the master budget. $$\begin{array} { | l | l | l | } \hline & \text { Master Budget } & \text { Actual Results } \\\hline \text { Units produced } & 4,000 &3 , 6 2 0 \\\hline \text { Direct Labour Hours } & 10,000 & 11,000 \\\hline \text { Fixed Overhead } & \$ 200,000 & \$ 205,000 \\\hline \text { Variable Overhead } & \$ 320,000 & \$ 355,000 \\\hline \text { Direct Labour } & \$ 200,000 & \$ 180,000 \\\hline\end{array}$$ The direct labour price variance was:

A) $40,000 F
B) $18,000 U
C) $40,000 U
D) $1,000 F