Reference no: EM132603044
Totes to Go, Inc. developed standard costs for direct material and direct labor. The following information is from the static budget for 2018:
Expected production and sales 7,000 units
Expected selling price per unit $ 680
Total fixed costs $1,400,000
In 2018, Totes estimated the following standard costs for one of its major product, the canvas tote bag
Standard Quantity Standard Price Standard Unit Cost
Direct materials 10 pounds $ 8 per pound $ 80
Direct manufacturing labor 3.7 hours $50 per hour $185
During 2018, the actual number of units produced and sold was 4,800, at an average selling price of $720. The actual cost of direct materials used was $392,700, based on 66,000 pounds purchased at $5.95 per pound. Direct manufacturing labor-hours actually used were 18,300, at the rate of $48 per hour. As a result, actual direct manufacturing labor costs were $878,400. Actual fixed costs were $1,170,000. There were no beginning or ending inventories.
Question 1: What is the direct labor flexible budget variance?
Option 1: $422,900 favorable
Option 2: $ 9,600 favorable
Option 3: $ 416,600 favorable
Option 4: $407,000 favorable