The following information describes a company's usage of direct labor in a recent period: $$\begin{array} { | l | l | }
\hline \text { Actual direct labor hours used } & 32,500 \
\hline \text { Actual rate per hour } & \$ 18.00 \
\hline \text { Standard rate per hour } & \$ 16.50 \
\hline \text { Standard hours for urits produced } & 32,000 \
\hline
\end{array}$$
- How much is the direct labor price variance?

Question

The following information describes a company's usage of direct labor in a recent period: $$\begin{array} { | l | l | } 
\hline \text { Actual direct labor hours used } & 32,500 \
\hline \text { Actual rate per hour } & \$ 18.00 \
\hline \text { Standard rate per hour } & \$ 16.50 \
\hline \text { Standard hours for urits produced } & 32,000 \
\hline
\end{array}$$
- How much is the direct labor price variance?

Quizplus · Accepted Answer

The direct labor price variance is calculated as (Actual Rate - Standard Rate) x Actual Hours. Here, it is ($18.00 - $16.50) x 32,500 = $48,750 unfavorable.

The Following Information Describes a Company's Usage of Direct Labor