Accurate Tax Returns budgets two direct labor hours for every tax return that it prepares, at a standard cost of $34 an hour.

Question

4 years ago

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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, 540 returns were completed with the labor cost totaling $26,000. The actual labor cost was $48.15 per hour during that period. The actual number of labor hours was 1,000. What is the direct labor cost variance?

Business

1 answer:

Artemon [7] · Answer 1 · 2022-02-13T20:27:10+03:00

Answer:

$14,500 unfavorable variance

Explanation:

the direct labor cost variance is calculated with the following formula:

direct labor variance = total actual labor hours x (actual labor cost per hour - standard cost per hour)

direct labor variance = 1,000 hours x ($48.15 - $34) = $14,500 unfavorable variance

The variance is unfavorable because the actual labor cost is much higher than the estimated labor cost.

Accurate Tax Returns budgets two direct labor hours for every tax return that it​ prepares, at a standard cost of​ $34 an hour.

Accurate Tax Returns budgets two direct labor hours for every tax return that it prepares, at a standard cost of $34 an hour.