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6 February, 07:12

Accurate Tax Returns budgets two direct labor hours for every tax return that it prepares, at a standard cost of $34 an hour. During the most recent year, 520 returns were completed with the labor cost totaling $18,000. The actual labor cost was $34.62 per hour during that period. The actual number of labor hours was 1,200.

1) What is the direct labor cost variance?

Select one:

A. $40,800 U

B. $320 F

C. $744 U

D. $40,800 F

E. None of the above

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Answers (1)
  1. 6 February, 07:24
    0
    Option C is correct ($744 U)

    Direct labor cost variance=$744 U

    It is unfavorable because actual labor cost is more than the standard cost of labor.

    Explanation:

    Option C is correct ($744 U)

    Given dа ta:

    Standard cost=$34/hour

    Actual labor cost = $34.62/hour

    Actual number of labor hours=1200 hours

    Required:

    The direct labor cost variance=?

    Solution:

    Direct labor cost variance = (Actual labor cost-Standard cost) * Actual number of labor hours.

    Direct labor cost variance = (34.62-34) * 1200

    Direct labor cost variance=$744 U

    It is unfavorable because actual cost is more than the standard cost of labor.
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