Home Decor Company manufactures special metallic materials for luxury homes that

Question

Home Decor Company manufactures special metallic materials for luxury homes that require highly skilled labor. Home Decor uses standard costs to prepare its flexible budget. For the first quarter of the year, direct materials and direct labor standards for one of their popular products were as follows: Direct materials: 2 pounds per unit; $4 per pound Direct labor: 5 hours per unit; $15 per hour Home Decor produced 4,000 units during the quarter. At the end of the quarter, an examination of the labor costs records showed that the company used 30,000 direct labor hours and actual total direct labor costs were $375,000. What is the direct labor cost variance? (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar.) O A. $300,000 Unfavorable O B. $75,000 Unfavorable O C. $75,000 Favorable O D. $300,000 Favorable

Explanation / Answer

Direct labor cost variance = 375000-(4000*5*15)= 75000 Unfavorable Option B is correct

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