Question

A job was budgeted to require 3 hours of labor per unit at $8.00 per hour. The job consisted of 7,100 units and was completed in 19,300 hours at a total labor cost of $172,800. What is the total labor cost variance?

Answer 1

Answer:

$2,400 unfavorable

Explanation:

Given that;

Time = 3 hours

Cost of labor = $8 per hour

Number of units = 7,100

Total actual labor cost = $172,800

Standard labor cost = 7,100 × 3 × $8 = $170,400

Total labor cost variance = Standard labor cost - Actual labor cost variance

Total labor cost variance = $170,400 - $172,800

Total labor cost variance = -$2,400

The negative sign here means that it is unfavorable, hence total labor cost variance is $2,400 unfavorable