9. Claire Company uses a standard costing system. The following information pert
ID: 2528854 • Letter: 9
Question
9. Claire Company uses a standard costing system. The following information pertains to direct labor costs for the month of February:
Standard direct labor rate per hour
$15.00
Actual direct labor rate per hour
$13.50
Labor rate variance
$18,000 favorable
Actual output
1,000 units
Standard hours allowed for actual production
10,000 hours
What is the total labor budget variance for Claire Company? (Ans: $12,000 U)
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Standard direct labor rate per hour
$15.00
Actual direct labor rate per hour
$13.50
Labor rate variance
$18,000 favorable
Actual output
1,000 units
Standard hours allowed for actual production
10,000 hours
Explanation / Answer
Actual labor hours worked = Labor rate variance/(Actual direct labor rate per hour-Standard direct labor rate per hour) = 18000/(13.5-15)= 12000 hours Total labor budget variance = Actual cost-Standard cost=(12000*13.5)-(10000*15)= $12000 U
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