Question

The standard direct labor cost for producing one unit of product is 5.7 direct labor hours at a standard rate of pay of $20. Last month, 16,000 units were produced and 86,200 direct labor hours were actually worked at a total cost of $1,685,000. How much was the direct labor quantity variance? (Enter a favorable variance as a positive number or an unfavorable variance as a negative number.)

Answer 1

Standard labor cost per unit = 5.7 labor hours,

Total 16000 units units were produced, thus standard labor hours = 16000 × 5.7 labor hours = 91,200 labor hours

Standard rate of pay per hour = $ 20.

Actual labor hours = 86200 hours , and actual labor cost = $ 1,685,000.

Now, Direct labor quantity variance = ( standard hours - Actual hours ) × standard rate per hour.

Direct labor quantity variance = ( 91200 - 86200) × $ 20.

Direct labor quantity variance = 5000 × $ 20 = $ 100,000 favorable.

Direct labor quantity variance = $ 100,000 Favorable