Use the following information for the next 6 questions.
Hyteck, Inc. is a capital intensive firm. Indirect costs make up nearly 70% of the product costs. The company has no direct material costs because customers provide the direct materials used for each job. To plan and control such costs, the firm employs flexible budgets and standard costs. Overhead rates, based on direct labor hours, are derived from the master budget.
-The direct labor price variance was
A) $2,000 F
B) $2,800 U
C) $1,000 U
D) $1,000 F

Question

Use the following information for the next 6 questions.
Hyteck, Inc. is a capital intensive firm. Indirect costs make up nearly 70% of the product costs. The company has no direct material costs because customers provide the direct materials used for each job. To plan and control such costs, the firm employs flexible budgets and standard costs. Overhead rates, based on direct labor hours, are derived from the master budget. 
-The direct labor price variance was
A) $2,000 F 
B) $2,800 U 
C) $1,000 U 
D) $1,000 F

Quizplus · Accepted Answer

The direct labor price variance is calculated as the difference between the actual direct labor rate and the standard direct labor rate, multiplied by the actual direct labor hours. In this case, the actual direct labor rate is $14 per hour, the standard direct labor rate is $12 per hour, and the actual direct labor hours are 200 hours. Therefore, the direct labor price variance is ($14 - $12) x 200 = $2,000 F.

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