Question

Piechocki Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During May, the company budgeted for 6,900 units, but its actual level of activity was 6,850 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for May:
Data used in budgeting:

Fixed element per month Variable element per unit
Revenue - $34.40
Direct labor $0 $6.40
Direct materials 0 14.00
Manufacturing overhead 39,000 1.90
Selling and administrative expenses 25,700 4.00
Total expenses $64,700 $26.30

Actual results for May:
Revenue $236,700
Direct labor $43,370
Direct materials $96,930
Manufacturing overhead $44,500
Selling and administrative expenses $30,490

Required:
The direct labor in the planning budget for May would be closest to ______.

Answer 1

Answer:

The direct Labor for planning the budget of May would be closest to = $ 6.4 * 6900 = $ 44160

Explanation:

The direct Labor for planning the budget of May would be closest to = $ 6.4 * 6900 = $ 44160

The direct Labor for planning the budget of 6,900 units would be = $ 6.4 * 6900 = $ 44160

The direct Labor for planning the budget of 6,850 units would be = $ 6.4 * 6850 = $ 43840

So the difference between the budgeted direct labor and actual direct labor would be =$ 43840- $43,370 = $ 470

So the difference between the budgeted direct labor  for estimated output and actual direct labor would be = $ 44160- $43,370 = $ 790