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Managerial Accounting Problem: Direct Labor Usage Variance?
A company provides the following standard 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!**
3 Answers
- KathrynLv 61 decade agoFavorite Answer
The formula for computing direct labor usage variance is:
How many hours it took minus how many hours it should have taken times the standard cost per hour.
In this case, 24,000 units should have taken 48,000 hours (2 hours per unit). Instead, it took 48,500 hours; so:
(48,500 - 48,000) * $12 = 500 * $12 = $6,000
- ?Lv 44 years ago
Budgeted production a million,000 instruments surely production 980 instruments components: common value/pound $2.00 common pounds according to finished unit 12 surely pounds offered and used in production 11,800 surely value paid for components $23,000