Genent Industries, Inc. (GII), developed standard costs for direct material and direct labor. In 2015, GII estimated the following standard costs for one of their major products, the 30-gallon heavy-duty plastic container.
$\begin{array}{lll}&\text { Budgeted quantity }&\text { Budgeted price }\
\text { Direct materials } & 0.30 \text { pounds } & \$ 20 \text { per pound } \
\text { Direct labor } & 0.20 \text { hours } & \$ 12 \text { per hour }
\end{array}$ During July, GII produced and sold 3,000 containers using 1,000 pounds of direct materials at an average cost per pound of $19 and 625 direct manufacturing labor hours at an average wage of $11.75 per hour.
-The direct manufacturing labor price variance during July is ________.

Question

Genent Industries, Inc. (GII), developed standard costs for direct material and direct labor. In 2015, GII estimated the following standard costs for one of their major products, the 30-gallon heavy-duty plastic container.
 $\begin{array}{lll}&\text { Budgeted quantity }&\text { Budgeted price }\
\text { Direct materials } & 0.30 \text { pounds } & \$ 20 \text { per pound } \
\text { Direct labor } & 0.20 \text { hours } & \$ 12 \text { per hour }
\end{array}$ During July, GII produced and sold 3,000 containers using 1,000 pounds of direct materials at an average cost per pound of $19 and 625 direct manufacturing labor hours at an average wage of $11.75 per hour.
-The direct manufacturing labor price variance during July is ________.

Quizplus · Accepted Answer

The direct manufacturing labor price variance is calculated as the difference between the actual cost of direct labor and the standard cost of direct labor. The actual cost of direct labor is $625 * $11.75 = $7,343.75. The standard cost of direct labor is 625 * $12 = $7,500. Therefore, the direct manufacturing labor price variance is $7,343.75 - $7,500 = $156.25 favorable.

Genent Industries, Inc During July, GII Produced and Sold 3,000 Containers Using 1,000