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Managerial Accounting problem? A company as the following standard cost data per unit of product:?
Direct material (3 gallons @ $5pergallon) $15
Direct labor (2hrs. @ $12 per hr.) $24
During the period, the company produced and sold 24,000 units incurring the following costs:
Direct materials 75,000 gallons at $4.90 per gallon
Direct labor 48,500 hours at $12.50 per hour
What is the direct labor usage variance?
**I know that the answer is $6,000 unfavorable BUT can someone please do their best to describe the formula on how to get this? My final is tomorrow, thanks!**
1 Answer
- 1 decade agoFavorite Answer
The difference between the labor they budgeted and the labor actually used (use budget amount for the labor rate)
They budgeted amount of direct labor is 48,000 hours (24,000 units produced X 2 hours/unit)
They actually used 48,500 hours (given)
The difference is 500 hours, multiply this by the budgeted rate ($12).
The answer is $6000.
