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) $2,000 unfavorable.
B) $3,000 unfavorable.
C) $6,000 unfavorable.
D) $8,000 unfavorable.
E) $9,000 unfavorable.

Question

Quizplus · Accepted Answer

Budgeted labor cost = 3 hours x $8.00 = $24.00 per unit
Total budgeted labor cost = 8,000 units x $24.00 per unit = $192,000

Actual labor cost = 22,000 hours x $8.00 per hour = $176,000

Labor cost variance = Actual labor cost - Budgeted labor cost
Labor cost variance = $176,000 - $192,000
Labor cost variance = $16,000 unfavorable

Therefore, the total labor cost variance is $6,000 unfavorable, which is option C.

A Job Was Budgeted to Require 3 Hours of Labor