Question

Use the following data to find the total direct labor cost variance if the company produced 3,500 units during the period.

Direct labor standard (4 hrs. @ $12/hr.)	$	48	per unit
Actual hours worked		12,250
Actual rate per hour	$	12.50

Answer 1

Answer:

Total direct labor cost = (AC x AQ) - (SC x SQ)

= ($12.50 x 12,250) - ($12 x 14,000)

= $153,125 - $168,000

=$14,875 Favorable

.

Explanations:

AC = Actual cost per direct labor hour

AQ = Actual hours worked

SC = Standard cost per direct labor hour

SQ = Standard hours for actual production = Standard hours per unit x Actual production = 4 hrs x 3,500 = 14,000 hours