Dem Mfg. has gathered the following data in preparing to record their direct labour payroll costs for the week: $$\begin{array} { l l }
\text { Actual hours morked } & 18,500 \
\text { Standard hours allowed } & 20,000 \
\text { Total direct labour variance } & \$ 8,300 \mathrm {~F} \
\text { Direct labour price variance } & \$ 3,700 \mathrm { U }
\end{array}$$ The actual direct labour costs were:
A) $144,300
B) $148,000
C) $160,000
D) $151,700

Question

Dem Mfg. has gathered the following data in preparing to record their direct labour payroll costs for the week: $$\begin{array} { l l } 
\text { Actual hours morked } & 18,500 \
\text { Standard hours allowed } & 20,000 \
\text { Total direct labour variance } & \$ 8,300 \mathrm {~F} \
\text { Direct labour price variance } & \$ 3,700 \mathrm { U }
\end{array}$$ The actual direct labour costs were:
A) $144,300
B) $148,000
C) $160,000
D) $151,700

Quizplus · Accepted Answer

To find the actual direct labour costs, you need to adjust the total direct labour variance by the direct labour price variance. The total direct labour variance is given as $8,300 F (favorable), and the direct labour price variance is $3,700 U (unfavorable). The formula to find the actual direct labour cost is: Actual Direct Labour Cost = (Standard Cost - Total Variance) + Price Variance. Since the total variance is favorable, it means the actual cost is less than the standard cost by $8,300, but the price variance being unfavorable means the actual cost is higher than it would be based solely on the rate variance by $3,700. Therefore, the actual direct labour costs are the standard cost minus $8,300 plus $3,700. However, the standard cost is not directly provided, but it can be inferred from the information given and the calculation needed to find the actual costs. The correct approach involves understanding that the actual direct labour costs can be found by adding the total variance to the standard cost and adjusting for the price variance. Since the specific standard cost calculation isn't provided in the question, the focus should be on understanding the relationship between the variances and the actual cost. Given the variances, the actual cost calculation indirectly involves these variances, leading to the selection of the correct option based on the provided data and the understanding of cost accounting principles.

Dem Mfg Has Gathered the Following Data in Preparing to Record