Asked by Andrés Tomas on May 17, 2024
Verified
Dillon has a standard of 2 hours of labor per unit at $12 per hour. In producing 2000 units Dillon used 3850 hours of labor at a total cost of $46970. Dillon's total labor variance is
A) $1030 U.
B) $800 U.
C) $1030 F.
D) $1930 F.
Total Labor Variance
A metric that measures the difference between the actual cost of labor and the standard or budgeted cost.
- Calculate the all-encompassing variance in overhead, the variance in labor costs and labor amounts, and the variance in material costs and amounts.
Verified Answer
NY
Neeraj YadavMay 22, 2024
Final Answer :
C
Explanation :
First, calculate the standard labor cost per unit:
2 hours/unit x $12/hour = $24/unit
Then, calculate the standard labor cost for the production of 2000 units:
$24/unit x 2000 units = $48,000
Next, calculate the actual labor cost for the production of 2000 units:
$46970
Finally, calculate the labor variance:
Actual labor cost - Standard labor cost
= $46970 - $48000
= $1030 F
2 hours/unit x $12/hour = $24/unit
Then, calculate the standard labor cost for the production of 2000 units:
$24/unit x 2000 units = $48,000
Next, calculate the actual labor cost for the production of 2000 units:
$46970
Finally, calculate the labor variance:
Actual labor cost - Standard labor cost
= $46970 - $48000
= $1030 F
Learning Objectives
- Calculate the all-encompassing variance in overhead, the variance in labor costs and labor amounts, and the variance in material costs and amounts.