Asked by YUEYING HUANG on Jun 17, 2024
Verified
If a company incurs direct labor cost of $82000 when the standard cost is $84000 it will
A) debit Labor Price Variance for $2000.
B) credit Labor Price Variance for $2000.
C) debit Labor Quantity Variance for $2000.
D) credit Labor Quantity Variance for $2000.
Labor Price Variance
The difference between the actual cost of labor and the standard or budgeted cost of labor over a period.
Direct Labor Cost
The total cost of work done by employees who are directly involved in the manufacture of a product or in performing a service.
- Determine the correct treatment of variance accounts within financial reporting.
Verified Answer
ZQ
Zachary QureshiJun 18, 2024
Final Answer :
B
Explanation :
The company spent $2,000 less on labor than the standard cost, indicating a favorable variance. Therefore, the Labor Price Variance account is credited to reflect the cost savings.
Learning Objectives
- Determine the correct treatment of variance accounts within financial reporting.