Question

Hatch has a standard of 2.2 hours of labor per unit, at $10.70 per hour. In producing 1,640 units, Hatch used 3,900 hours of labor at a total cost of $40,400. What is Hatch's total labor variance

Answer 1

Answer: $1,794.40 Unfavorable

Step-by-step explanation:

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

Actual cost of labor = $40,400

Standard cost of labor = Hours per unit * Cost per hour * Number of units

= 2.2 * 10.70 * 1,640

= $38,605.60

Total labor variance = 40,400 - 38,605.60

= $1,794.40 Unfavorable

Unfavorable because actual cost of labor was greater than the standard cost.