Community Manufacturing Inc. developed the following standard costs for direct material and direct labor for one of their major products, the 30-gallon heavy-duty plastic container.

During May, Community produced and sold 10,000 containers using 2,200 pounds of direct materials at an average cost per pound of $24 and 1,050 direct labor hours at an average wage of $14.75 per hour.
-May's direct labor cost variance was:
A)$750.00 unfavorable.
B)$262.50 favorable.
C)$487.50 unfavorable.
D)indeterminable using the above information.

Question

Community Manufacturing Inc. developed the following standard costs for direct material and direct labor for one of their major products, the 30-gallon heavy-duty plastic container.
  
During May, Community produced and sold 10,000 containers using 2,200 pounds of direct materials at an average cost per pound of $24 and 1,050 direct labor hours at an average wage of $14.75 per hour.
-May's direct labor cost variance was:
A)$750.00 unfavorable. 
B)$262.50 favorable. 
C)$487.50 unfavorable. 
D)indeterminable using the above information.

Quizplus · Accepted Answer

C)Total direct labor cost variance = Actual direct labor cost - Standard direct labor cost
= (1,050 × $14.75)- (10,000 × 0.10 × $15)= $15,487.50 - $15,000.00 = $487.50 U