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