Question

The management of Watchdog Security Systems has calculated the following​ variances:

Direct materials cost variance	$10,000 U
Direct materials efficiency variance	38,000 F
Direct labor cost variance	16,000 F
Direct labor efficiency variance	12,500 U
Total variable overhead variance	7,500 F
Total fixed overhead variance	3,500 F

What is the total direct labor variance of the​ company?

A $28,500 F

B. $11,000 F

C. $3,500 F

D. $16,000 F

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, 530 returns were completed with the labor cost totaling $26,000. The actual labor cost was $49.06 per hour during that period. The actual number of labor hours was 1,100. What is the direct labor cost​ variance?

A. $7,980 F

B. $16,566 U

C. $37,400 U

D. $37,400 F

Answer 1

Computation of total direct labor variance of Watchdog Security Systems:

Total Direct Labor Variance

= Direct Labor Cost Variance + Direct Labor Efficiency Variance

= $16,000 F + $12,500 U

= $3,500 F

Correct Option: C. $3,500 F

Computation of Direct labor Cost variance of Accurate Tax Returns:

Standard Rate per hour = $34

Actual Hours = 1100

Actual Rate per hour = $49.06

Direct Labor Cost Variance

= Actual Hours * (Standard Rate – Actual Rate)

= 1,100 * ($34 - $49.06)

= 1,100 * $15.06

= $16,566 U

Correct Option: B. $16,566 U