High Fliers Company produces model airplanes. During the month of November, it produced 2,000 planes. The actual labor hours were 7 hours per plane. Its standard labor hours are 10 hours per plane. The standard labor rate is $11 per hour. At the end of November, High Fliers found that it had a favorable labor rate variance of $10,500.
-Refer to Figure 10-4. What was High Fliers' total labor variance?
A) $61,500 F
B) $76,500 F
C) $76,500 U
D) $61,500 U

Question

Quizplus · Accepted Answer

Step 1: Calculate the actual labor hours
Actual labor hours = Number of planes produced * Actual labor hours per plane = 2,000 * 7 = 14,000

Step 2: Calculate the standard labor hours
Standard labor hours = Number of planes produced * Standard labor hours per plane = 2,000 * 10 = 20,000

Step 3: Calculate the labor efficiency variance
Labor efficiency variance = (Standard labor hours - Actual labor hours) * Standard labor rate = (20,000 - 14,000) * $11 = $66,000 F

Step 4: Calculate the total labor variance
Total labor variance = Labor efficiency variance + Labor rate variance = $66,000 F + $10,500 F = $76,500 F

Therefore, the best choice is B, $76,500 F.

High Fliers Company Produces Model Airplanes