Question

The Alma Company has the following data for 1,000 units produced during August. Direct Manufacturing Labor Budgeted direct labor hours per unit was 0.5 at $24.00 per hour Actual cost per hour was $24.50 Labor efficiency variance was $336 favorable. The total actual cost of direct labor was:

Answer 1

The actual cost of direct labor is= $12593

Step-by-step explanation:

First, we need to calculate the number of actual hours:

The labor efficiency variance measures the capacity to utilize labor in accordance with expectations. The variance is useful for spotlighting those areas in the production process that are using more labor hours than anticipated. This variance is calculated as the difference between the actual labor hours used to produce an item and the standard amount that should have been used, multiplied by the standard labor rate.

The general formula is:

Labor efficiency variance= (Actual hours - Standard hours) x Standard rate

In this exercise, we do not have the number of actual hours. The standard hours are 500 (1000 units*0,5)

336=(actual hours - 500hs)*$24

actual hours= 336/24 + 500= 514 hours

Now we can calculate the cost of direct labor

direct labor= 514hs*$24,5=$12593