Thomas Corporation produces stopwatches.According to company standards,it should take 1 hour of direct labor to produce a stopwatch.Thomas' standard labor cost is $18 per hour.During June,Thomas produced 5,000 stopwatches and used 5,150 hours of direct labor at a total cost of $102,500.What is Thomas' direct labor price variance for June?

Question

Quizplus · Accepted Answer

The direct labor price variance is calculated as (Actual Hours x Actual Rate) - (Actual Hours x Standard Rate). Here, it is (5,150 x $19.90) - (5,150 x $18) = $102,500 - $92,700 = $9,800 unfavorable.

Thomas Corporation Produces Stopwatches