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 (4.00 hrs. @ $6.20/hr.)	$	24.80	per unit
Actual hours worked		12,050
Actual rate per hour	$	6.30

Multiple Choice

• $12,050 favorable.

• $1,400 favorable.

• $1,400 unfavorable.

• $10,885 unfavorable.

• $10,885 favorable.

Answer 1

Data for Variance
Standard ( 1 unit)				Standard (3500 units)					Actual (3500 units)
Hour	Rate	Amount		Hour	Rate	Amount			Hour	Rate	Amount
4	$       6.20	$    24.80		14000	$       6.20	$ 86,800.00			12050	$       6.30	$ 75,915.00

Direct labor cost variance =			Standard Cost - Actual cost
		=	$ 86,800 - $ 75,915
		=	$ 10,885.00	(Favorable)

Answer: $ 10,885 favorable