LHU Corporation makes and sells a product called Product WZ. Each unit of Produc

Question

LHU Corporation makes and sells a product called Product WZ. Each unit of Product WZ requires 3.1 hours of direct labor at the rate of $27.00 per direct labor-hour.The company plans to sell 50,000 units of Product WZ in June. The finished goods inventories on June 1 and June 30 are budgeted to be 620 and 180 units, respectively. Budgeted direct labor costs for June would be: $1,342,500 $4,148,172 $4,185,672 $4,166,922 Schllck Framing's cost formula for its supplies cost is $1,800 per month plus $11 per frame. For the month of August, the company planned for activity of 620 frames, but the actual level of activity was 626 frames. The actual supplies cost for the month was $8,900. The activity variance for supplies cost in August would be closest to: $66 U $280 F $66 F $280 U Thomasson Air uses two measures of activity, flights and passengers, in the cost formulas in its budgets and performance reports. The cost formula for plane operating costs is $36,220 per month plus $2,054 per flight plus $1 per passenger. The company expected its activity in April to be 82 flights and 232 passengers, but the actual activity was 81 flights and 237 passengers. The actual cost for plane operating costs in April was $197,000. The activity variance for plane operating costs in April would be closest to: $7,880 U $2,049 F $2,049 U $7,880 F

Explanation / Answer

Answer: Budgeted direct labor costs for June would be:$4148172

Answer:

Since the flexible budget expense is more than the planning budget, the variance is Unfavorable (U).

Answer: The activity variance for plane operating costs in April would be closest to:

Since the flexible budget expense is less than the planning budget, the variance is favorable (F)

Direct Labor budget June Budgeted unit sales 50000 Add desired ending finished goods inventory 180 Total needs 50180 Less beginning finished goods inventory 620 Required production in units 49560 Direct labor-hours per unit 3.1 Total direct labor-hours needed 153636 Direct labor cost per hour $27 Budgeted direct labor costs for june $4,148,172

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