Question

Shimano Company makes a product that is expected to require 2 hours of labor per unit of product. The standard cost of labor is $5.60. Shimano actually used 1.90 hours of labor per unit of product. The actual cost of labor was $5.50 per hour. Shimano made 1,400 units of product during the period. Based on this information alone, the labor price variance is: Multiple Choice $784 unfavorable. $266 favorable. $784 favorable. $266 unfavorable. Next Visit question mapQuestion 11 of 53 Total 11 of 53

Answer 1

Labor price variance = $266 Favorable

Step-by-step explanation:

Labor price variance = (Standard Price per hour - Actual Price per hour)
`*` Actual Hours

Standard Price per hour = $5.60

Actual Price per hour = $5.50

Actual hours = 1.90 for each unit

For 1,400 units = 1,400
`*` 1.90 = 2,660

Therefore, variance = ($5.60 - $5.50)
`*` 2,660 = 266

Since the value is positive as because actual price was less than standard price the variance is favorable

Correct option is

$266 favorable