Reference: 21_05
A job was budgeted to require three hours of labor per unit at $8 per hour. The job consisted of 8,000 units and was completed in 22,000 hours at a total labor cost of $198,000.
-What is the total labor cost variance?
A) $22,000 unfavorable
B) $16,000 unfavorable
C) $6,000 unfavorable
D) $16,000 favorable
E) $22,000 favorable

Question

Quizplus · Accepted Answer

Rate variance: $198,000 - (22,000 hours x $8) = $22,000 unfavorable
Efficiency variance: ($8 x 22,000) - [$8 x (8,000 x 3 hours)] = $16,000 favorable
Total labor cost variance = $6,000 unfavorable

Reference: 21_05 A Job Was Budgeted to Require Three Hours of Labor