The Clamen Company makes table lamps, for which the following standards have been developed:
During October, production of 100 lamps was expected, but 110 lamps were actually completed.
Direct materials purchased and used were 2,100 pounds at an actual price of $2.20 per pound.
Direct labour cost for the month was $5,310, and the actual pay per hour was $9.00.
-The direct-labour price variance for the month of October is
A) $600 unfavourable.
B) $600 favourable.
C) $590 unfavourable.
D) $590 favourable.

Question

The Clamen Company makes table lamps, for which the following standards have been developed:
  During October, production of 100 lamps was expected, but 110 lamps were actually completed.
Direct materials purchased and used were 2,100 pounds at an actual price of $2.20 per pound.
Direct labour cost for the month was $5,310, and the actual pay per hour was $9.00.
-The direct-labour price variance for the month of October is
A) $600 unfavourable. 
B) $600 favourable. 
C) $590 unfavourable. 
D) $590 favourable.

Quizplus · Accepted Answer

To calculate the direct-labor price variance, we use the following formula:

Actual Hours Worked x (Actual Rate – Standard Rate)

Actual hours worked = Direct labor cost / Actual pay per hour
Actual hours worked = $5,310 / $9.00 per hour = 590 hours

Standard rate = $9.50 per hour (given in the lamp-making standards)

Direct-labor price variance = 590 hours x ($9.00 - $9.50) = $590 unfavorable

Therefore, the correct choice is C, $590 unfavorable.

The Clamen Company Makes Table Lamps, for Which the Following