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?

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 4 Budgeted hourly wage rate $12.10 Budgeted production 5,830 units Actual labor hours per unit of product 3.7 Actual hourly wage rate $12.40 Actual production 5,280 units

Explanation / Answer

1. Static labour budget = (5830*4*12.10) = $282172

2. Flexible budget variance = (Flexible budget cost-actual cost)

= (5280*4*12.10)-(5280*3.7*12.40)

Flexible budget variance = 13306 favourable

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