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Problem
Milton Company uses a standard cost system.
• Standards call for 2 direct labor hours per widget. The standard labor rate is $10 per hour. • Four pounds of material are needed for each widget at a standard cost of $2.25 per pound.
Milton actually produces 17,000 widgets during the year.
• Direct labor costs are $359,100 for 34,200 hours.• Milton purchased and used 70,000 pounds of materials at $2.50 per pound.
For direct labor, what is the price variance? Answers are labeled as favorable (F) or unfavorable (U).
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