Strongsville Company produces 2,500 units.Each unit was expected to require 2 labor hours at a cost of $10 per hour.Total labor cost was $52,250 for 4,750 hours worked.Direct labor is measured in labor hours.What is the direct labor price variance?
A)$2,500 Favorable
B)$2,500 Unfavorable
C)$4,750 Favorable
D)$4,750 Unfavorable

Question

Quizplus · Accepted Answer

The direct labor price variance is calculated as (Actual Hours x Actual Rate) - (Actual Hours x Standard Rate). The actual rate is $52,250 / 4,750 hours = $11 per hour. The standard rate is $10 per hour. The variance is (4,750 x $11) - (4,750 x $10) = $52,250 - $47,500 = $4,750 Unfavorable.

Strongsville Company Produces 2,500 Units