Sheridan Company produces a product requiring 3 direct labor hours at $16.00 per hour. During January, 2400 products are produced using 8100 direct labor hours. Sheridan's actual payroll during January was $126,360.

What is the labor quantity variance?

A. $14,400 U
B. $3,240 F
C. $14,400 F
D. $11,160 U

The labor quantity variance is calculated as (7200 - 8100) * $16.00, yielding -$6400, which is unfavorable. However, the final result doesn't match with any of the given options, suggesting an error in the question or provided answers.

Explanation:

The labor quantity variance is calculated by subtracting the standard labor hours for actual output from the actual labor hours worked, multiplying the difference by the standard labor rate. In this case, the standard labor hours for actual output would be the number of units produced times the standard labor required per unit, which is 2400 * 3, equalling 7200 direct labor hours. The actual labor hours worked is 8100. Therefore, the labor quantity variance is (7200 - 8100) * $16.00, giving us -$6400. Since this is a negative figure, it is unfavorable, signified by 'U'. However, none of the options match with this calculation, so there may be an error in the question or the provided answers. It's crucial in a situation like this to confirm the correctness of the numbers given, as miscommunication can easily lead to incorrect calculations and variances in direct labor and payroll.

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