Question

The per-unit standards for direct labor are 2 direct labor hours at $15 per hour. If in producing 2900 units, the actual direct labor cost was $81600 for 5100 direct labor hours worked, the total direct labor variance is

Answer 1

$5400 Favorable

Step-by-step explanation:

Standard 2 hour at $15 per hour

Standard hours 2 hour per unit * 2900 units = 5800 hours

Total Standard cost = 5800 hours * $15 per hour = $87,000

Actual hours = 5100

Actual cost = $81600 / 5100 hours = $16 per hour

Variance = Standard - Actual

Labor hour Variance Favorable = 700 hours (5800 hours - 5100 hours)

Total Labor variance = $5400 ($87,000 - $81,600)