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20 October, 06:01

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

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  1. 20 October, 06:19
    0
    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
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