Answer: The answer is direct Labour price variance unfavourable $40,000
Explanation:
To calculate direct Labour price variance, we use the formula
(Standard Rate - Actual Rate ) × Actual Quantity
Standard Rate = $8.00, Actual Rate = $8.50, Actual Quantity = 80,000
(8.00 - 8.50) × 80,000
= -0.5 × 80,000
= - 40,000
The direct Labour price variance is $40,000 unfavourable
The journal entry will be
$ $
Dr. Cr
Direct Labour price variance 40,000 unfavourable
Direct Labour efficiency variance. 40,000 unfavourable
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Total. 40,000. 40,000
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