Question

Sheffield Corp. produces a product requiring 3 direct labor hours at $16.00 per hour. During January, 2800 products are produced using 8700 direct labor hours. Sheffield's actual payroll during January was $135720. What is the labor quantity variance?
a. $4800 F
b. $1320 U
c. $3480 F
d. $4800 U

Answer 1

Answer:

correct option is d. $4800 U

Explanation:

given data

product requiring =  3 direct labor hours

standard rate = $ 16 per direct labor hour

produced using = 8700 direct labor hours

actual payroll = $135720

to find out

labor quantity variance

solution

we get here labor quantity variance that is express as

Direct labor quantity variance = (standard hours worked for actual production - actual hour worked)  × standard rate per direct labor hour   ...................1

here  standard hours worked for actual production will be as

standard hours worked = standard hours required per unit of production × actual units produced      

standard hours worked = 3 × 2800

standard hours worked = 8400 hours but we have given actual work hour 8700  direct labor hours

so put all value is equation 1 we get

Direct labor quantity variance = ( 8400 - 8700 )  × $16

Direct labor quantity variance = $4800 unfavorable

so correct option is d. $4800 U