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: Budgeted labor hours per unit of product Budgeted hourly wage rate Budgeted production Actual labor hours per unit of product Actual hourly wage rate 3.7 $13.60 5,330 units 3.2 $13.90 4,980 Actual production units 1. What was the direct labor static budget for 2016? Submit AnswerTries 0/2 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)? Submit AnswerTries 0/2

Explanation / Answer

1.

Direct labour Static budget for 2016 = Budgeted production * Budgeted labour hours per unit of product * Budgeted hourly wage rate

= 5,330 * 3.7 * 13.6

= 268,205.6

2.

Actual direct labour cost = Actual production * Actual labour hours per unit of product * Actual hourly wage rate

= 4,980 * 3.2 * 13.9

= 221,510.4

Flexible budget direct labour cost = Actual production * Budgeted labour hours per unit of product * Budgeted hourly wage rate

= 4,980 * 3.7 * 13.6

= 250,593.6

Direct labour flexible budget variance for 2016 = Actual direct labour cost - Flexible budget direct labour cost

= 221,510.4 - 250,593.6

= 29,083.2 Favourable.

(Favourable as the Actual cost is less than the Flexible budget cost)

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