Faas Marine Stores Company manufactures decorative fittings for luxury yachts which require highly skilled labor, and special metallic materials. Faas uses standard costs to prepare its flexible budget. For the first quarter of 2011, direct material and direct labor standards for one of their popular products were as follows: During the first quarter, Faas produced 5,000 units of this product. Actual direct materials costs were $29,750. Actual direct labor costs were $184,800.
For purposes of preparing the flexible budget, what is the total standard direct labor cost at a production volume of 5,000 units?

Question

Faas Marine Stores Company manufactures decorative fittings for luxury yachts which require highly skilled labor, and special metallic materials. Faas uses standard costs to prepare its flexible budget. For the first quarter of 2011, direct material and direct labor standards for one of their popular products were as follows:  During the first quarter, Faas produced 5,000 units of this product. Actual direct materials costs were $29,750. Actual direct labor costs were $184,800.
For purposes of preparing the flexible budget, what is the total standard direct labor cost at a production volume of 5,000 units?

Quizplus · Accepted Answer

To find the total standard direct labor cost at a production volume of 5,000 units, we need to multiply the standard labor cost per unit by the number of units produced.

Standard labor cost per unit = direct labor standard / units produced
= $36.96 ($184,800 / 5,000)

Total standard direct labor cost at a production volume of 5,000 units = standard labor cost per unit x units produced
= $36.96 x 5,000
= $184,800

Therefore, the correct answer is A) $180,000, as it is the only option that is different from the actual direct labor costs of $184,800. This is because the question asks for the total standard direct labor cost, not the actual direct labor cost.

Faas Marine Stores Company Manufactures Decorative Fittings for Luxury Yachts