Use the information below to answer the following question(s).
Sawyer Industries Inc. (SII), developed standard costs for direct material and direct labour. In 2013, SII estimated the following standard costs for one of their major products, the 30-litre heavy-duty plastic container.
During July, SII produced and sold 10,000 containers using 2,200 kilograms of direct materials at an average actual cost per kilogram of $24 and 1,050 direct manufacturing labour hours at an average actual wage of $14.75 per hour.
-July's direct manufacturing labour price variance is
A) $250.00 favourable.
B) $262.50 favourable.
C) $487.50 favourable.
D) $262.50 unfavourable.
E) $250.00 unfavourable.

Question

Use the information below to answer the following question(s).
Sawyer Industries Inc. (SII), developed standard costs for direct material and direct labour. In 2013, SII estimated the following standard costs for one of their major products, the 30-litre heavy-duty plastic container.
  During July, SII produced and sold 10,000 containers using 2,200 kilograms of direct materials at an average actual cost per kilogram of $24 and 1,050 direct manufacturing labour hours at an average actual wage of $14.75 per hour.
-July's direct manufacturing labour price variance is
A) $250.00 favourable. 
B) $262.50 favourable. 
C) $487.50 favourable. 
D) $262.50 unfavourable. 
E) $250.00 unfavourable.

Quizplus · Accepted Answer

The direct manufacturing labour price variance is calculated as (Actual Rate - Standard Rate) x Actual Hours. The given variance is $262.50 favourable, indicating that the actual rate was lower than the standard rate.

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