Price and Usage Variances- DIRECT LABOR EXERCISE 4: Use the following data to determine a price and usage variance for Direct Labor: Budget (Std) $12.50 Actual $10.60 Price per Hour Labor Used per unit (barrel) DL Cost per unit (barrel) X 1.25 hours 1.00 hours $13.25 $12.50 Note that Bettis "expected" to use 1.00 labor hour per unit of product (barrel). Once again, remember the definition of Standard Quantity. Standard Quantity The amount we SHOULD have used for the ACTUAL quantity produced. Planned for Units Produced Actual Actual Production Volume 8,200 8,200 Labor Used per unit (barrel) X 1.00 hours X 1.25 hour DL Total Quantity 8,200 hours 10,250 hours So, Bettis expected to use a total of 8,200 hours of DL to produce 8,200 units (barrels). Calculate the Price Variance and Usage Variance. BE SURE TO USE CORRECT STANDARD QUANTITY IN THE RIGHT COLUMN Also, label the variances as either Favorable (F) or Unfavorable (U). Actual Costs Flexible Budget Direct Labor Standard Qty. Actual Hours Actual Hours X Actual Price X Standard X Standard Price per hour Price per hour per hour hours hours hours X $ X S per per per hour hour hour Price Usage Variance Variance Flexible Budget Variance