The following data is given for the Harry Company: Overhead is applied on standard labor hours.
The direct labor time variance is:
A) 6,000F
B) 6,000U
C) 33,000U
D) 33,000F

Question

The following data is given for the Harry Company:  Overhead is applied on standard labor hours.
The direct labor time variance is:
A) 6,000F 
B) 6,000U 
C) 33,000U 
D) 33,000F

Quizplus · Accepted Answer

Since overhead is applied on standard labor hours, the direct labor time variance can be calculated as follows: 
Actual Labor Hours - Standard Labor Hours = Direct Labor Time Variance 
If the variance is unfavorable (more actual hours than standard), it is denoted by U (unfavorable) and if it is favorable (less actual hours than standard), it is denoted by F (favorable). 
In this case, since the information about actual and standard labor hours is not given, we cannot use the formula directly. However, we can use the given data to eliminate some choices. 
Option A and D have the same magnitude but opposite signs, so we can eliminate them. 
Option B implies that actual labor hours were less than standard, which would result in a favorable variance. However, overhead is applied on standard hours, not actual hours, so this option can be eliminated too. 
Therefore, the correct answer is C, indicating an unfavorable variance of 33,000 hours.

The Following Data Is Given for the Harry Company