The Foamy Company makes mugs for which the following standards have been developed: $$\begin{array} { l l l }
& \text { Standard Inputs } & \text { Standard Price } \
& \text { Expected for Each } & \text { Expected per } \
& \text { Unit of Output } & \text { Unit of Output } \
\text { Direct materials } & 5 \text { ounces } & \$ 2 \text { per ounce } \
\text { Direct labor } & 15 \text { hours } & \$ 8 \text { per hour }
\end{array}$$ Production of 400 Mugs was expected in June, but 440 mugs were actually completed. Direct materials purchased and used were 2,100 ounces at an actual price of $2.20 per ounce. Direct labor cost for the month was $5,310, and the actual pay per hour was $9.00. _ is the direct- labor usage variance for the month of June.
A) $560 favorable
B) $560 unfavorable
C) $580 unfavorable
D) $580 favorable

Question

The Foamy Company makes mugs for which the following standards have been developed: $$\begin{array} { l l l } 
& \text { Standard Inputs } & \text { Standard Price } \
& \text { Expected for Each } & \text { Expected per } \
& \text { Unit of Output } & \text { Unit of Output } \
\text { Direct materials } & 5 \text { ounces } & \$ 2 \text { per ounce } \
\text { Direct labor } & 15 \text { hours } & \$ 8 \text { per hour }
\end{array}$$ Production of 400 Mugs was expected in June, but 440 mugs were actually completed. Direct materials purchased and used were 2,100 ounces at an actual price of $2.20 per ounce. Direct labor cost for the month was $5,310, and the actual pay per hour was $9.00. _ is the direct- labor usage variance for the month of June.
A) $560 favorable
B) $560 unfavorable
C) $580 unfavorable
D) $580 favorable

Quizplus · Accepted Answer

The direct-labor usage variance is calculated as the difference between the standard direct-labor hours allowed for the actual output and the actual direct-labor hours used, multiplied by the standard direct-labor rate.Standard direct-labor hours allowed for the actual output = 440 mugs * 15 hours per mug = 6,600 hoursActual direct-labor hours used = 5,310 / $9.00 per hour = 590 hoursDirect-labor usage variance = (6,600 hours - 590 hours) * $8.00 per hour = $560 favorable

The Foamy Company Makes Mugs for Which the Following Standards