The Matthew Company makes tables for which the following standards have been developed:
$\begin{array}{lll}&\text { Standard Inputs Expected }&\text { Standard Price }\
\text { Expected }&\text { For Each Unit of Output }&\text { Per Unit of Input }\\hline
\text { Direct Materials } & 7 \text { ounces } & \$5.20 \text { per ounce } \
\text { Direct Labor } & 3 \text { hours } & \$ 16 \text { per hour }
\end{array}$
Production of 200 tables was expected in May,but 220 tables were actually completed.Direct materials purchased and used were 2,100 pounds at an actual price of $4.40 per pound.Direct labor cost for the month was $10,620,and the actual pay per hour was $18.00.What is the direct labor price variance for the month of May?
A) $1,180 Favorable
B) $1,180 Unfavorable
C) $1,200 Favorable
D) $1,200 Unfavorable

Question

Quizplus · Accepted Answer

The direct labor price variance is calculated as the difference between the actual cost and the standard cost for the actual hours worked. The standard cost for the actual hours worked is 3 hours per table * 220 tables * $16 per hour = $10,560. The actual cost is $10,620. Therefore, the variance is $10,620 - $10,560 = $60 unfavorable, not $1,180. There seems to be a mistake in my calculation based on the provided options. Let's correct the approach:The correct calculation for the direct labor price variance is: (Actual Hourly Rate - Standard Hourly Rate) * Actual Hours Worked. Given the actual pay per hour is $18.00 and the standard rate is $16.00, and the actual labor cost is $10,620 at an actual pay of $18.00 per hour, we first find the actual hours worked: $10,620 / $18.00 per hour = 590 hours. So, the variance is ($18.00 - $16.00) * 590 hours = $2.00 * 590 = $1,180 unfavorable.

The Matthew Company Makes Tables for Which the Following Standards