Fletcher Company collected the following data regarding production of one of its products. Compute the total direct labor cost variance. $\begin{array}{llr}
\text { Direct labor standard (2 hrs. @ \$12.75/hr.) } &\$25.50& \text { per finished unit } \
\text { Actual direct labor hours} &81,500& \text {hrs. } \
\text {Actual finished units produced } &40,000& \text {units } \
\text { Actual cost of direct labor } &\$1,100,250\
\end{array}$

A) $19,125 favorable.
B) $61,125 unfavorable.
C) $80,250 favorable.
D) $61,125 favorable.
E) $80,250 unfavorable.

Question

Fletcher Company collected the following data regarding production of one of its products. Compute the total direct labor cost variance. $\begin{array}{llr}
  \text { Direct labor standard (2 hrs. @ \$12.75/hr.) } &\$25.50& \text { per finished unit } \
 \text {  Actual direct labor hours} &81,500& \text {hrs.  } \
 \text {Actual finished units produced  } &40,000& \text {units  } \
 \text { Actual cost of direct labor } &\$1,100,250\
\end{array}$

A) $19,125 favorable.
B) $61,125 unfavorable.
C) $80,250 favorable.
D) $61,125 favorable.
E) $80,250 unfavorable.

Quizplus · Accepted Answer

The total direct labor cost variance is calculated as the difference between the actual direct labor cost and the standard direct labor cost for the actual output. The standard cost for 40,000 units is 40,000 units * $25.50 = $1,020,000. The actual cost is $1,100,250. The variance is $1,100,250 - $1,020,000 = $80,250 unfavorable.

Fletcher Company Collected the Following Data Regarding Production of One