Clark Company manufactures a product with a standard direct labor cost of two hours at $18.00 per hour. During July 2000 units were produced using 4200 hours at $18.30 per hour. The labor price variance was
A) $1260 U.
B) $4860 U.
C) $4860 F.
D) $3600 U.

Question

Quizplus · Accepted Answer

The labor price variance is calculated as (Actual Hourly Rate - Standard Hourly Rate) x Actual Hours Worked. Here, it is ($18.30 - $18.00) x 4200 = $0.30 x 4200 = $1260 Unfavorable (U), because the actual rate is higher than the standard rate.

Clark Company Manufactures a Product with a Standard Direct Labor