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:

Output

The sum of all goods or services created by an enterprise, industry, or the economy over a certain period.

Economic Profits

The profit or loss calculated by taking out both straightforward and assumed expenses from total income.

Purely Competitive

A business environment marked by the proliferation of many small enterprises, a uniform product, and effortless procedures for both entry and exit.

Market Price

The ongoing rate at which a service or asset is traded in a particular market.