Question

The per-unit standards for direct labor are 2 direct labor hours at 15 per hour. If in producing 2000 units, the actual direct labor cost was 59200 for 3700 direct labor hours worked, the total direct labor variance is ____________.

Answer 1

The total direct labor variance is $800 favorable, calculated by subtracting the actual labor cost ($59,200) from the standard labor cost ($60,000) for the actual production of 2000 units.

Step-by-step explanation:

To calculate the total direct labor variance, we need to find the difference between the actual labor cost and the standard labor cost for the actual production level. First, we will calculate the standard cost for the actual production:

Standard cost = Standard hours per unit * Number of units * Standard rate per hour

Standard cost = 2 hours/unit * 2000 units * $15/hour = $60,000

Next, we compare the standard cost to the actual cost to determine the variance:

Total direct labor variance = Standard cost - Actual cost

Total direct labor variance = $60,000 - $59,200 = $800 favorabledlemma.

The 'favorable' description indicates that the actual cost was less than the standard cost for the actual level of production.