A company uses the following standard costs to produce a single unit of output.

Question

A company uses the following standard costs to produce a single unit of output.

During the latest month, the company purchased and used 68,000 pounds of direct materials at a price of $1.20 per pound to produce 10,000 units of output. Direct labor costs for the month totaled $45,199 based on 5,870 direct labor hours worked. Variable manufacturing overhead costs incurred totaled $23,600 and fixed manufacturing overhead incurred was $16,000. Based on this information, the total direct labor cost variance for the month was:

Direct materials 7 pounds at $1.10 per pound = $ 7.70 Direct labor 0.6 hour at $8.00 per hour = $ 4.80 Manufacturing overhead 0.6 hour at $4.60 per hour = $ 2.76

Explanation / Answer

Total direct labor cost variance = 45199-(10000*4.8)= 2801 Favorable

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