Abba Company produces sails for boats. The Houston plant uses a standard costing

Question

Abba Company produces sails for boats. The Houston plant uses a standard costing system with the following standards for materials (cloth) and direct labor.

There are no beginning or ending inventories for direct materials.

For direct labor, what is the total budget variance?

Standards     Cloth (Direct Materials)         Standard Price $ 5     Direct Labor         Standard Rate $ 13 December Data     Number of Sails Produced 25,419     Cloth (Direct Materials)         Actual Price $ 4         Actual Usage 102,098 square yards         Standard Quantity Allowed (given production) 100,910 square yards     Direct Labor         Actual Rate $ 11         Actual Usage 22,850 hours         Standard Quantity Allowed (given production) 25,563 hours

Explanation / Answer

Total Labor Cost Variance = Standard Cost for Actual Output - Actual Cost Incurred

= 25563 x 13 - 22850 x 11

= 80969 Fav

Total Labor Cost Variance = Standard Cost for Actual Output - Actual Cost Incurred

= 25563 x 13 - 22850 x 11

= 80969 Fav

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