TaskMaster Enterprises employs a standard cost system in which direct materials

Question

TaskMaster Enterprises employs a standard cost system in which direct materials inventory is carried at standard cost. TaskMaster has established the following standards for the prime costs of one unit of product. Standard Quantity 8 pounds Standard Price Standard Cost $15.20 Direct Materials Direct Labor $ 1.90 per pound $10.10 per hour 20 hour 2.02 $17.22 During November, TaskMaster purchased 208,000 pounds of direct materials at a total cost of $436,800, The total factory wages for November were $54,000, 90% of which were for direct labor. TaskMaster manufactured 24,000 units of product during November using 182,000 pounds of direct materials and 5,000 direct labor hours. What is the direct labor price (rate) variance for November? $2,140, o $1,900 O $2,020 o $1,980.

Explanation / Answer

Direct Labor Price (Rate) Variance

Total factory wages = $ 54,000

Direct Labor cost(Actual cost) = $54,000*90%= $ 48,600

Actual Direct Labor hours= 5000 hours

Actual Direct labor hour rate = Actual Direct Labor cost/ Actual Direct Labor hours

= $ 48,600/ 5000 hours= $ 9.72/ hour

Standard Direct labor hour rate= $ 10.10/hour

Direct Labor Price (Rate) Variance= Actual Direct Labor hours(Actual Direct labor hour

rate-Standard Direct labor hour rate)

= 5000(9.72- 10.10)

                                                                        = $ 1,900 Favorable

Hence correct answer is option B= $1,900

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