Fletcher Company collected the following data regarding production of one of its products. Compute the total direct labor cost variance. $\begin{array}{lrl}
\text { Direct labor standard (2hrs. @, } \$ 12.75 / \mathrm{hr} .) & \$ 5.50&\text {per finished} \
&&\text {unit}\
\text { Actual direct labor hours } & 81,500 &\text {hrs.} \
\text { Actual finished units produced } & 40,000&\text {units}\
\text { Actual cost of direct labor } & \$ 1,100,250
\end{array}$

Question

Quizplus · Accepted Answer

The total direct labor cost variance is the difference between the actual direct labor cost and the standard direct labor cost. The standard direct labor cost is the product of the standard direct labor rate and the standard direct labor hours. The actual direct labor cost is the product of the actual direct labor rate and the actual direct labor hours. In this case, the standard direct labor rate is $12.75 per hour, the standard direct labor hours are 2 hours per finished unit, the actual direct labor hours are 81,500 hours, and the actual finished units produced are 40,000 units. Therefore, the standard direct labor cost is $1,020,000 (2 hours x $12.75 per hour x 40,000 units), and the actual direct labor cost is $1,100,250. The total direct labor cost variance is $80,250 unfavorable ($1,100,250 - $1,020,000).

Fletcher Company Collected the Following Data Regarding Production of One