Question

Heavy Products, Inc. developed standard costs for direct material and direct labor. In 2017, AII estimated the following standard costs for one of their major products, the 10-gallon plastic container. Budgeted quantity Budgeted price Direct materials 0.90 pounds $60 per pound Direct labor 0.10 hours $30 per hour During June, Heavy Products produced and sold 19,000 containers using 1,200 pounds of direct materials at an average cost per pound of $63 and 17,100 direct manufacturing labor-hours at an average wage of $31.25 per hour. The direct manufacturing labor price variance during June is ________.

Answer 1

$950,400 Favorable

Step-by-step explanation:

The computation of direct manufacturing labor price variance is shown below:-

Standard quantity for production = 19,000 × 0.90

= 17,100

Direct Material flexible-Budget variance = Standard Quantity × Standard Price - Actual Quantity × Actual Price

= 17,100 × $60 - 1,200 × $63

= 1,026,000 - $75,600

= $950,400 Favorable

Therefore for computing the direct manufacturing labor price variance we simply applied the above formula.