Question

Jones Company has budgeted two hour of direct labor per chair at a standard cost of $20 per hour. During January, 150 actual hours were worked, completing 100 chairs. All were sold and Jones Company actually labor $21 per hour. What is the direct labor cost variance for January?

Answer 1

Answer:

The direct labor cost variance=-$850

Explanation:

Direct labor cost variance can be described as the difference between the actual cost of direct labor and the standard cost of direct labor which is the budgeted cost of direct labor.

Direct labor cost variance=Actual cost of direct labor-budgeted cost of direct labor

where;

Actual cost of direct labor=Actual hours×actual rate

Actual cost of direct labor=(150×21)=$3,150

Actual cost of direct labor=$3,150

Budgeted cost of direct labor=Budgeted rate×actual hours

Actual hours=150 hours

Budgeted rate=rate per hour×number of hours for every chair

=(20×100×2)=$4,000

The direct labor cost variance=Actual cost of direct labor-budgeted cost of direct labor

where;

Actual cost of direct labor=$3,150

Budgeted cost of direct labor=$4,000

replacing;

The direct labor cost variance=(3,150-4,000)=-$850

The direct labor cost variance=-$850