Paradise Energy Company produces a product with a direct labor standard of 4.5 hours per unit at a rate of $13.50 per hour.During July 2,200 units were produced using 9,825 labor hours at an actual cost of $135,094.How much is the total direct labor variance for July?
A)$2,456 unfavorable
B)$1,013 favorable
C)$1,444 unfavorable
D)$3,469 favorable

Question

Quizplus · Accepted Answer

First, we need to calculate the total actual direct labor cost:
Actual direct labor cost = actual hours worked x actual rate
= 9,825 hours x $13.50/hour
= $132,262.50

Next, we need to calculate the total standard direct labor cost:
Standard direct labor cost = standard labor hours allowed x standard rate
= 200 units x 4.5 hours/unit x $13.50/hour
= $12,150

The total direct labor variance can then be calculated as:
Total direct labor variance = actual direct labor cost - standard direct labor cost
= $132,262.50 - $12,150
= $120,112.50 unfavorable

Therefore, the best choice is C, $1,444 unfavorable.

Paradise Energy Company Produces a Product with a Direct Labor