Jaxson Corporation has the following data related to direct labor costs for September: actual costs are 10,200 hours at $15.75 per hour and standard costs are 10,800 hours at $15.50 per hour. What is the direct labor time variance? a. $9,300 favorable b. $9,300 unfavorable c. $9,450 favorable d. $9,450 unfavorable
The direct labor time variance is calculated via the equation, DL time variance = (SH - AH) x AR where SH and AH are the number of hours for standard and actual and AR is the actual rate. Substituting the known variables, DL time variance = (10,800 - 10,200) x ($15.75) = $9,450 Since we got a positive value, the variance is favorable. The answer is letter C.
