A job was budgeted to require 3 hours of labor per unit at $8.00 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) $9,000 unfavorable.
B) $2,000 unfavorable.
C) $8,000 unfavorable.
D) $6,000 unfavorable.
E) $3,000 unfavorable.

Question

A job was budgeted to require 3 hours of labor per unit at $8.00 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) $9,000 unfavorable.
B) $2,000 unfavorable.
C) $8,000 unfavorable.
D) $6,000 unfavorable.
E) $3,000 unfavorable.

Quizplus · Accepted Answer

The budgeted labor cost for the job is:
3 hours x $8/hour = $24 per unit
$24 per unit x 8,000 units = $192,000
The actual labor cost for the job is $198,000, which is $6,000 more than the budgeted amount. Therefore, the labor cost variance is $6,000 unfavorable. Option D is the correct answer.

A Job Was Budgeted to Require 3 Hours of Labor