Usability of upper-limb prostheses remains to be a challenge due to the complexity of hand-object interactions in activities of daily living. Functional evaluation is critical for the optimization of prosthesis performance during device design and parameter tuning phase. Therefore, we implemented a low-cost physics-based virtual reality environment (VRE) capable of simulating wide range of object grasping and manipulation tasks to enable human-in-the-loop optimization. Importantly, our novel VRE can assess user performance quantitatively using movement kinematics and interaction forces. We present a preliminary experiment to validate our VRE. Four able-bodied subjects performed object transfer tasks with a simulated myoelectric one DoF soft-synergy prosthetic hand, while wearing braces to restrain different levels of wrist motion. We found that the task completion time was similar across conditions, however limited wrist pronation led to more shoulder compensatory motion whereas challenging object orientation caused more torso compensatory motion.