he following information is for direct labor cost for X Company for 2016: 1. Wha

Question

he 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 2.2 Budgeted hourly wage rate $11.80 Budgeted production 5,640 units Actual labor hours per unit of product 1.7 Actual hourly wage rate $12.30 Actual production 6,410 units

Explanation / Answer

1. Direct labor static budget for 2016:

Static budget = Budgeted production x labor hour per unit x hourly wage rate
= 5,640 x 2.2 x $11.80 = $146,414

2. Flexible budget = 6,410 x 2.2 x $11.80 = $166,404
Actual cost = 6,410 x 1.7 x $12.30 = $134,033

Variance between actual cost and Flexible budget = Standard - Actual = $166,404 - $134,033= $32,371 Favorable

Variance between Static and Flexible budget = Flexible - Static = $166,404 - $146,414= $19,990 Favorable

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.