Mid City Products Inc. (MCP), developed standard costs for direct material and direct labor. In 2017, MCP estimated the following standard costs for one of their most popular products.

During September, MCP produced and sold 2,000 units using 14,400 pounds of direct materials at an average cost per pound of $7.00 and 950 direct labor hours at an average wage of $10.40 per hour.
The direct labor flexible-budget variance during September is ________.
A) $120.00 favorable
B) $120.00 unfavorable
C) $520.00 favorable
D) $520.00 unfavorable

Question

Mid City Products Inc. (MCP), developed standard costs for direct material and direct labor. In 2017, MCP estimated the following standard costs for one of their most popular products.

During September, MCP produced and sold 2,000 units using 14,400 pounds of direct materials at an average cost per pound of $7.00 and 950 direct labor hours at an average wage of $10.40 per hour.
The direct labor flexible-budget variance during September is ________.
A) $120.00 favorable 
B) $120.00 unfavorable 
C) $520.00 favorable 
D) $520.00 unfavorable

Quizplus · Accepted Answer

Direct labor flexible-budget variance = (950 × $10.40) - (2,000 × 0.50 × $10.00) = $120.00 F