Peking Palace Company reported the following:Standard hours per unit2.5 hoursStandard rate per hour$16.00Actual hours used12,560Actual rate per hour$15.50Number of units produced4,900 What is the direct labor time variance?a.$(4,805) favorableb.$(4,960) favorablec.$4,805 unfavorabled.$4,960 unfavorable

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Asked Nov 25, 2019
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  1. Peking Palace Company reported the following:

Standard hours per unit

2.5 hours

Standard rate per hour

$16.00

Actual hours used

12,560

Actual rate per hour

$15.50

Number of units produced

4,900

 

What is the direct labor time variance?

a.$(4,805) favorable

b.$(4,960) favorable

c.$4,805 unfavorable

d.$4,960 unfavorable

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Expert Answer

Step 1

Direct labor Time Variance

Direct labor Efficiency variance is the measure of difference between the standard costs of actual number of direct labor hours utilized during a period and standard hours of direct labor for the level of output achieved.

Step 2

Following is the calculation of d...

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Direct Labor Time Variance = Standard cost of actual hours - Standard Cost Direct Labor Time Variance= (Actual Hours x Standard Rate)- (Standard Hours x Standard Rate) (12,560 hours x $16)- {(2.5 hoursx 4,900) x $16 | Direct Labor Time Variance = | $200,960-$196,000 =$4,960 unfavorable

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Variance Analysis

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