Dillon has a standard of 2 hours of labor per unit at $12 per hour. In producing 2000 units Dillon used 3850 hours of labor at a total cost of $46970. Dillon's labor price variance is
A) $770 U.
B) $800 U.
C) $1030 F.
D) $1930 F.

Question

Quizplus · Accepted Answer

The labor price variance is calculated as (Actual Hours x Actual Rate) - (Actual Hours x Standard Rate). Here, the Actual Hours are 3850, and the Actual Rate can be found by dividing the total cost by the actual hours ($46970 / 3850 = $12.20). The Standard Rate is $12. So, the calculation is (3850 x $12.20) - (3850 x $12) = $59370 - $46200 = $770 Unfavorable.

Dillon Has a Standard of 2 Hours of Labor Per