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 7,300 units, but its actual level of activity was 7,250 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: The direct labor in the planning budget for May would be closest to:

Question

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danialamin danialamin · Answer 1 · 2020-03-04T12:58:33+01:00

Answer:

The variance of the direct labour in the planning budget of May is $330 Favorable.

Explanation:

As the data is not given in the question, the data is found online and is attached herewith.

Actual output = 7250 units

Actual cost of direct labor= $48,970

Standard direct labor cost per unit = $6.80

Standard direct labor cost for actual output = Actual output * standard direct materials cost per unit = 7250 units * $6.80 = $49300

Direct Labour Cost variance = Standard cost - Actual cost = $49300 - $48970= $330 F

As the actual cost is less than standard cost, the variance is favorable.

So, the answer is $330 Favorable.