Use the information below to answer the following question(s).
Robb Industries Inc. (RII), developed standard costs for direct material and direct labour. In 2013, RII estimated the following standard costs for one of their major products, the 10-litre plastic container.
During June, RII produced and sold 5,000 containers using 490 kilograms of direct materials at an average actual cost per kilogram of $32 and 250 direct manufacturing labour-hours at an average actual wage of $15.25 per hour.
-June's direct manufacturing labour price variance is
A) neither favourable or unfavourable.
B) $62.50 favourable.
C) $128.00 unfavourable.
D) $62.50 unfavourable.
E) $128.00 favourable.

Question

Use the information below to answer the following question(s).
Robb Industries Inc. (RII), developed standard costs for direct material and direct labour. In 2013, RII estimated the following standard costs for one of their major products, the 10-litre plastic container.
  During June, RII produced and sold 5,000 containers using 490 kilograms of direct materials at an average actual cost per kilogram of $32 and 250 direct manufacturing labour-hours at an average actual wage of $15.25 per hour.
-June's direct manufacturing labour price variance is
A) neither favourable or unfavourable. 
B) $62.50 favourable. 
C) $128.00 unfavourable. 
D) $62.50 unfavourable. 
E) $128.00 favourable.

Quizplus · Accepted Answer

The direct manufacturing labour price variance is calculated as (Actual Rate - Standard Rate) x Actual Hours. If the variance is negative, it is unfavourable. The given variance is $62.50 unfavourable.

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