Accurate Tax Returns budgets two direct labor hours for every tax return that it

Question

Accurate Tax Returns budgets two direct labor hours for every tax return that it prepares, at a standard cost of $30 an hour. During the most recent year, 540 returns were completed with the labor cost totaling $22,000. The actual labor cost was $40.74 per hour during that period. The actual number of labor hours was 1,200. What is the direct labor cost variance? (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar) A. $5,800 F O B. $36,000 F O C. $36,000 U O D. $12,888 U Click to select your answer

Explanation / Answer

D.$12,888 U.

direct labour cost variance = actual hours *( actual rate - standard rate)

=>1,200 hours * ($40.74 - $30).

=>1200* $10.74

=>$12,888....(u)..........(unfavorable as actual rate is greater than standard rate).

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