Sunland Companyproduces a product requiring 3 direct labor h

Sunland Companyproduces a product requiring 3 direct labor hours at $16.00 per hour. During January, 3000 products are produced using 9600 direct labor hours. Sunland’s actual payroll during January was $149760. What is the labor quantity variance?

Solution

Standard rate = 16

Standard hours = 3,000 * 3 = 9,000

Actual hours = 9,600

Labour quantity variance = Standard rate * (Standard hours - Actual hours)

= 16 * (9,000 - 9,600)

= 9,600 Unavourable