The standard direct labor cost for producing one unit of product is 5 direct labor hours at a standard rate of pay of $20. Last month 15000 units were produced and 73500 direct labor hours were actually worked at a total cost of $1350000. The direct labor quantity variance was
A) $30000 unfavorable.
B) $45000 unfavorable.
C) $45000 favorable.
D) $30000 favorable.

Question

Quizplus · Accepted Answer

The direct labor quantity variance is calculated as (Actual Hours - Standard Hours) x Standard Rate. Standard hours for 15000 units = 15000 units * 5 hours/unit = 75000 hours. The variance is (73500 - 75000) x $20 = -1500 x $20 = -$30000, which is favorable because actual hours worked were less than the standard hours allowed.

The Standard Direct Labor Cost for Producing One Unit of Product