Questions 1 and 2 refer to the following information The following information i

Question

Questions 1 and 2 refer to the following information

The following information is for direct labor cost for X Company for 2016:

1. What was the direct labor static budget for 2016? $229,687

2. What was the direct labor flexible budget variance for 2016 (a positive number means a favorable variance; a negative number means an unfavorable variance)?

Budgeted labor hours per unit of product 3.8 Budgeted hourly wage rate $13.80 Budgeted production 4,380 units Actual labor hours per unit of product 3.6 Actual hourly wage rate $14.30 Actual production 4,850 units

Explanation / Answer

1. What was the direct labor static budget for 2016?

Static direct labour = (4380*3.8*13.80) = $229687

2. What was the direct labor flexible budget variance for 2016 (a positive number means a favorable variance; a negative number means an unfavorable variance)?

Flexible budget variance = Flexible budget labour cost-actual labour cost

= (4850*3.8*13.80)-(4850*3.6*14.30)

Flexible budget variance = 4656 Favourable

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