Use the following data to find the total direct labor cost variance if the company produced 3,500 units during the period. Direct labor standard (4 hrs. @ $7/hr.) $ 28 per unit Actual hours worked 12,250
Actual rate per hour $ 7.50
A) $12,250 favorable.
B) $7,000 unfavorable.
C) $6,125 favorable.
D) $7,000 favorable.
E) $6,125 unfavorable.

Question

Quizplus · Accepted Answer

To find the total direct labor cost variance, we need to calculate the difference between the actual cost of labor and the standard cost of labor for the number of units produced.

Standard cost of labor per unit = 4 hours x $7/hour = $28 per unit

Actual cost of labor per unit = actual hours worked x actual rate per hour / number of units produced = (12,250 hours x $7.50/hour) / 3,500 units = $26.25 per unit

Total direct labor cost variance = (standard cost of labor per unit - actual cost of labor per unit) x number of units produced

= ($28 - $26.25) x 3,500 units

= $6,125 favorable

Therefore, the best choice is C.

Use the Following Data to Find the Total Direct Labor