Valatia Ltd has gathered the following data in preparing to record their direct labour payroll costs for the week: $\begin{array} { l l }
\text { Actual hours worked } & 9,500 \
\text { Stardard hours allowed } & 10,000 \
\text { Total direct labour variance } & \$ 1,810 \mathrm {~F} \
\text { Direct labour price variance } & \$ 190 \mathrm { U }
\end{array}$
The actual direct labour costs were:
A) $38,000
B) $40,000
C) $37,810
D) $38,190

Question

Valatia Ltd has gathered the following data in preparing to record their direct labour payroll costs for the week: $\begin{array} { l l } 
\text { Actual hours worked } & 9,500 \
\text { Stardard hours allowed } & 10,000 \
\text { Total direct labour variance } & \$ 1,810 \mathrm {~F} \
\text { Direct labour price variance } & \$ 190 \mathrm { U }
\end{array}$ 
The actual direct labour costs were:
A) $38,000
B) $40,000
C) $37,810
D) $38,190

Quizplus · Accepted Answer

The total direct labour variance is given as $1,810 Favourable (F), and the direct labour price variance is $190 Unfavourable (U). To find the actual direct labour costs, we start with the standard cost (which is not directly given but can be inferred from the variances) and adjust it by the variances. Since the total variance is favourable, it means the actual cost was less than the standard cost by $1,810. However, part of this calculation involves adjusting for the price variance, which was unfavourable, meaning the actual price paid was $190 more than expected. To find the actual cost, we add the unfavourable price variance to the standard cost minus the total favourable variance. Since the exact standard cost isn't provided, we work backwards: Actual cost = Standard cost - $1,810 (total variance) + $190 (price variance). Rearranging to solve for the actual cost directly is not straightforward without the standard cost, but knowing the relationship between these variances and the actual cost allows us to deduce the correct answer based on the information given. The correct approach involves understanding that the favourable total variance reduces the actual cost, but the unfavourable price variance increases it. Without the standard cost, we directly look for an option that logically fits the scenario described by the variances, which leads us to deduce the actual cost indirectly. Given the options and the nature of variances, option D is the correct choice by understanding the impact of the variances on the actual cost.

Valatia Ltd Has Gathered the Following Data in Preparing to Record