The following information describes a company's usage of direct labor in a recent period. The total direct labor cost variance is: $\begin{array}{llcc}
\text { Actual hours used} &45,000\
\text {Actual rate per hour } &\$15.00\
\text { Standard rate per hour} &\$14.50\
\text { Standard hours for units produced } &47,000\

\end{array}$

Question

The following information describes a company's usage of direct labor in a recent period. The total direct labor cost variance is: $\begin{array}{llcc}
  \text {  Actual hours used} &45,000\
 \text {Actual rate per hour  } &\$15.00\
 \text {  Standard rate per hour} &\$14.50\
 \text { Standard hours for units produced } &47,000\

\end{array}$

Quizplus · Accepted Answer

Explanation:The total direct labor cost variance is the difference between the actual direct labor cost and the standard direct labor cost. The actual direct labor cost is the product of the actual hours used and the actual rate per hour. The standard direct labor cost is the product of the standard hours for units produced and the standard rate per hour. In this case, the actual direct labor cost is $45,000 (45,000 hours x $15.00 per hour) and the standard direct labor cost is $68,250 (47,000 hours x $14.50 per hour). Therefore, the total direct labor cost variance is $22,500 unfavorable ($68,250 - $45,000).

The Following Information Describes a Company's Usage of Direct Labor