The following labor standards have been provided by the Rand Company:
Standard hours per unit: 2
Standard cost per hour: $12
During the most recent month Rand produced 2,000 units and used 3,900 labor hours at a cost of $47,580. What was the labor price variance for the month?
A) $800 unfavorable
B) $780 favorable
C) $800 favorable
D) $780 unfavorable

Question

Quizplus · Accepted Answer

The labor price variance is calculated as (Actual Hours x Actual Rate) - (Actual Hours x Standard Rate). Actual Hours = 3,900, Actual Rate = $47,580 / 3,900 = $12.20, Standard Rate = $12. Therefore, the variance is (3,900 x $12.20) - (3,900 x $12) = $47,580 - $46,800 = $780 unfavorable.

The Following Labor Standards Have Been Provided by the Rand