Professional Woodworkers budgeted 3 hours of direct labor per unit at $8.50 per hour to produce 400 units of product. The 400 units were completed using 1,140 hours at $8.75 per hour. What is the direct labor price variance?
A) $300 favorable
B) $285 unfavorable
C) $300 unfavorable
D) $285 favorable

Question

Quizplus · Accepted Answer

The direct labor price variance is calculated as (Actual Hourly Rate - Standard Hourly Rate) x Actual Hours Worked. Here, it is ($8.75 - $8.50) x 1,140 = $0.25 x 1,140 = $285 unfavorable, because the actual rate is higher than the standard rate.

Professional Woodworkers Budgeted 3 Hours of Direct Labor Per Unit