Question

A job was budgeted to require 3 hours of labor per unit at $8.00 per hour. the job consisted of 8,000 units and was completed in 22,000 hours at a total labor cost of $198,000. what is the total labor cost variance?

Answer 1

Answer:

$6000 unfavorable.

Explanation:

Given information:

Time = 3 hours

Cost of labor = $8.00

Number of units = 8,000

Total actual labor cost = $198,000.

Standard labor cost = 8,000 × 3 × $8.00 = $192,000

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

Total labor cost variance = $192,000  - $198,000

Total labor cost variance = -$6,000

Here negative sign represents the unfavorable amount.

The total labor cost variance is $6000 unfavorable.

Answer 2

The total labor cost of variance is the difference of the two presented costs. The actual cost of production is presented below,
                       actual cost of production = $198,000
The other cost can be calculated through the equation,
                     cost of production = (3 hours/labor u)(($8/unit)(8,000) = $192,000
Thus, the total labor cost variance is approximately $6,000.