Answer the following questions using the information below:
Diana Industries, Inc. (DII), developed standard costs for direct material and direct labor. In 2010, DII estimated the following standard costs for one of their major products, the 10-gallon plastic container.
During June, DII produced and sold 10,000 containers using 980 pounds of direct materials at an average cost per pound of $32 and 500 direct manufacturing labor-hours at an average wage of $15.25 per hour.
-June's direct manufacturing labor price variance is:
A)$125 unfavorable
B)$125 favorable
C)$7,623.50 unfavorable
D)None of these answers are correct.

Question

Answer the following questions using the information below:
Diana Industries, Inc. (DII), developed standard costs for direct material and direct labor. In 2010, DII estimated the following standard costs for one of their major products, the 10-gallon plastic container.
  During June, DII produced and sold 10,000 containers using 980 pounds of direct materials at an average cost per pound of $32 and 500 direct manufacturing labor-hours at an average wage of $15.25 per hour.
-June's direct manufacturing labor price variance is:
A)$125 unfavorable 
B)$125 favorable 
C)$7,623.50 unfavorable 
D)None of these answers are correct.

Quizplus · Accepted Answer

To calculate the direct manufacturing labor price variance, we need to compare the actual wage rate paid to the standard wage rate.

Standard wage rate = $15 per hour
Actual wage rate = $15.25 per hour

Variance = (Actual wage rate - Standard wage rate) x Actual direct manufacturing labor hours

Variance = ($15.25 - $15) x 500
Variance = $0.25 x 500
Variance = $125 unfavorable

Therefore, the correct answer is A) $125 unfavorable.

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