Green Garden Supply budgeted three hours of direct labor per unit at $10.00 per hour to produce 500 units of product.The 500 units were completed using 1,600 hours of direct labor at $10.50 per hour.What is the direct labor price variance?

Question

Quizplus · Accepted Answer

- Step 1: Calculate the standard cost for direct labor:
Standard direct labor cost = Standard labor rate x Standard hours used
Standard direct labor cost = $10.00 x 500 units = $5,000

- Step 2: Calculate the actual cost for direct labor:
Actual direct labor cost = Actual labor rate x Actual hours used
Actual direct labor cost = $10.50 x 1,600 hours = $16,800

- Step 3: Calculate the direct labor price variance:
Direct labor price variance = Actual direct labor cost - (Standard labor rate x Actual hours used)
Direct labor price variance = $16,800 - ($10.00 x 1,600) 
Direct labor price variance = $16,800 - $16,000
Direct labor price variance = $800 unfavorable

Therefore, the best choice is D, which is $800 unfavorable.

Green Garden Supply Budgeted Three Hours of Direct Labor Per