Kitselman Inc. produces a product requiring 3 direct labor hours at $20.00 per hour. During January, 2,000 products are produced using 6,300 direct labor hours. Kitselman's actual payroll during January was $122,850. What is the labor quantity variance?
A) $2,850 U
B) $6,000 F
C) $3,150 F
D) $6,000 U

Question

Quizplus · Accepted Answer

The labor quantity variance is calculated as (Actual Hours - Standard Hours) x Standard Rate. Standard Hours for 2,000 products = 2,000 x 3 = 6,000 hours. Actual Hours = 6,300. Standard Rate = $20.00. Labor Quantity Variance = (6,300 - 6,000) x $20 = 300 x $20 = $6,000 Unfavorable.