Question

The Brown Manufacturing​ Company's costing system has two​ direct-cost categories: direct materials and direct manufacturing labor. Manufacturing overhead​ (both variable and​ fixed) is allocated to products on the basis of standard direct manufacturing labor hours​ (DLH). At the beginning of

2014 Brown adopted the following standards for its manufacturing​ costs: 

Direct materials	3 lbs. at $4 per lb.		$12.00
Direct manufacturing labor	4 hrs. at $20 per hr.		80.00
Manufacturing overhead:
Variable	$6 per DLH		24.00
Fixed	$7 per DLH		28.00
Standard manufacturing cost per output unit			$144.00

The denominator level for total manufacturing overhead per month in

2014 is 37,000 direct manufacturing​ labor-hours

Brown​'s flexible budget for January 2014

was based on this denominator level. The records for January indicated the​ following:

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Direct materials purchased	26,300 lb. at $3.80 per lb.
Direct materials used	23,300 lb.
Direct manufacturing labor	28,400 hrs. at $19.60 per hr.
Total actual manufacturing overhead (variable and fixed)	$500,000
Actual production	7,600 output units

Now complete the table for direct labor.

Now complete the table for direct labor.

	...
	.

		Actual Input Qty.
	Actual Costs	x	Flexible
	Incurred	Budgeted Price	Budget
Direct Manuf. Labor

  

Answer 1

Actual cost Actual Input quantity Flexible Incurred X Budgeted price Budget Direct manufacturing Labor =28400*19.60 =28400/4*80 =7600*80 556640 568000 608000
Based on the above we can find the following variances
	Labor efficiency variance			=608000-568000		40000	Favourable
	Labor rate variance			=568000-556640		11360	Favourable
				Total		51360	Favourable