Question

Oyster Bay Surfboards manufactures fiberglass surfboards. The standard cost of direct materials and direct manufacturing labor is $214 per board. This includes 35 pounds of direct​ materials, at the budgeted price of $2 per​ pound, and 10 hours of direct manufacturing​ labor, at the budgeted rate of $14.40 per hour. Following are additional data for the month of​ July: Units completed 5,500 units Direct material purchases 230,000 pounds Cost of direct material purchases $782,000 Actual direct manufacturing labor-hours 48,000 hours Actual direct labor cost $705,600 Direct materials efficiency variance $1,100 F There were no beginning inventories. 1. Compute direct manufacturing labor variances for July.

Answer 1

	Actual Costs Incurred		Flexible Budget
	(Actual Input Qty. x Actual Price)	(Actual Input Qty. x Budgeted Price)	(Budgeted Input Qty. Allowed for Actual Output x Budgeted Price)
Direct mfg. labor	$705,600	$691,200	$792,000
	(48,000 * $14.70)	(48,000 * $14.40)	(5,500 * 10 * $14.40)
	Price variance	Efficiency variance
	$14,400	$100,800
	Unfavorable	Favorable
	Flexible-budget variance
	$86,400
	Favourable