The following data relate to direct labor costs for the current period of Executive Inc.: $$\begin{array} { l l }
\text { Standard costs } & 6,000 \text { hours at } \$ 12.00 \
\text { Actual costs } & 7,500 \text { hours at } \$ 11.60
\end{array}$$ ? What is the direct labor time variance?
A) $17,400 favorable
B) $17,400 unfavorable
C) $18,000 favorable
D) $18,000 unfavorable

Question

The following data relate to direct labor costs for the current period of Executive Inc.: $$\begin{array} { l l } 
\text { Standard costs } & 6,000 \text { hours at } \$ 12.00 \
\text { Actual costs } & 7,500 \text { hours at } \$ 11.60
\end{array}$$ ? What is the direct labor time variance?
A) $17,400 favorable
B) $17,400 unfavorable
C) $18,000 favorable
D) $18,000 unfavorable

Quizplus · Accepted Answer

The direct labor time variance is calculated as (Actual Hours - Standard Hours) x Standard Rate. Here, it is (7,500 - 6,000) x $12 = 1,500 x $12 = $18,000 unfavorable, because actual hours exceeded standard hours, indicating less efficiency.

The Following Data Relate to Direct Labor Costs for the Current