A Job Was Budgeted to Require 3 Hours of Labor

question 147

Multiple Choice

A job was budgeted to require 3 hours of labor per unit at $8.00 per hour. The job consisted of 8,000 units and was completed in 22,000 hours at a total labor cost of $198,000. What is the total labor cost variance?

• A) $2,000 unfavorable.
• B) $3,000 unfavorable.
• C) $6,000 unfavorable.
• D) $8,000 unfavorable.
• E) $9,000 unfavorable.

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Definitions:

Aggregate Demand

The all-embracing pursuit of goods and services in an economy, calculated at a fixed overall price level and within a chosen time frame.

Business Cycle Trough

The phase in the business cycle where economic activity is at its lowest point, preceding a recovery or expansion period.

Purchasing Power

The financial ability to buy goods and services; it reflects the value of money in terms of the quantity of goods or services that one unit of money can buy.

Government Bonds

Debt securities issued by a government to support government spending and obligations.