The following data relate to direct labor costs for February: What is the direct labor time variance?
A) $7,700 favorable
B) $7,700 unfavorable
C) $11,200 unfavorable
D) $11,200 favorable

Question

The following data relate to direct labor costs for February:  What is the direct labor time variance?
A) $7,700 favorable 
B) $7,700 unfavorable 
C) $11,200 unfavorable 
D) $11,200 favorable

Quizplus · Accepted Answer

To calculate the direct labor time variance, we need to multiply the standard labor rate per hour by the difference between the actual hours worked and the standard hours allowed. 
The standard labor rate per hour is $20, given in the data. 
The standard hours allowed are 7,400 (400 units x 18 hours per unit). 
The actual hours worked are 8,200 (400 units x 20.5 hours per unit). 
Therefore, the direct labor time variance is: 
($20 x 7,400) - ($20 x 8,200) = $-11,200, which is unfavorable. 
Option C is the only one that represents an unfavorable variance of $11,200.

The Following Data Relate to Direct Labor Costs for February