Actual production during October was 53,000 bars and actual direct labor cost wa

Question

Actual production during October was 53,000 bars and actual direct labor cost was $39,000.

Required:

Prepare a flexible budget for Ershey's Chocolates that shows the projected direct labor cost. If an amount is zero, enter "0".

What is the difference between the flexible budget and the actual labor costs?

Were the company's labor costs over or under budget for the month?
SelectOver budgetUnder budget

Flexible Budget Actual Difference Estimated production (bars) Direct labor per box mins Direct labor hours needed hrs Direct labor cost per hour x $ Projected direct labor cost $ $ $

Explanation / Answer

Estimated production (bars)   53,000 bars

Direct labor per box 3 mins

Direct labor hours needed = 53,000*3/60 =2650 hrs

Direct labor cost per hour $15

Projected direct labor cost 2650*15 =$39750

difference between the flexible budget and the actual labor costs =39750-39000= $750

Over budget

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