The following data relate to direct labor costs for the current period: Standard costs 7,500 hours...

Question

Question

The following data relate to direct labor costs for the current period:

Standard costs	7,500 hours at $11.70
Actual costs	6,000 hours at $12.00

The direct labor time variance is

a.$18,000 favorable

b.$17,550 favorable

c.$18,000 unfavorable

d.$17,550 unfavorable

Answer 1

Answer #1

Labor time Variance: The difference between the standard hours which should have been worked and the hours actually worked, valued at the standard labor rate. If negative then unfavorable and positive then favorable.

Direct Labor Time Variance: [(7500-6000)x$11.70]	$17,550	favorable
[(Standard hour for Actual Production-Actual Hours) x Standard Rate]

correct answer is option (b) i.e. $17550 favorable

Answer 2

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