Video Products budgeted 2 hours of direct labor per unit at $9.00 per hour to produce 3,500 units of product. The 3,500 units were completed using 7,350 hours at $9.25 per hour. What is the direct labor price variance?

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 ($9.25 - $9.00) x 7,350 = $0.25 x 7,350 = $1,837.50 unfavorable, because the actual rate is higher than the standard rate.

Video Products Budgeted 2 Hours of Direct Labor Per Unit