Question

Tuscany Statuary Company manufactures bust statues of famous historical
figures. All statues are the same size, and each statue requires the
same amount of resources. Tuscany employs a standard costing system
and has the following standards in order to produce one statue:

                    standard quantity         standard price
direct materials     7 pounds                 $12 per pound
direct labor         5 hours                  $23 per hour

During 2018, Tuscany produced 7,000 statues using a total of 41,000
direct labor hours. Tuscany had no beginning inventories of any type
for 2018. During 2018, Tuscany purchased 59,000 pounds of direct
materials at a total cost of $784,700. At December 31, 2019, Tuscany
had 6,000 pounds of direct materials in its inventory. The total cost
of direct labor for Tuscany during 2018 was $861,000.

Calculate Tuscany's total direct labor variance for 2018. If the
variance is favorable, place a minus sign in front of your answer
(i.e., -5000). If the variance is unfavorable, simply enter your
answer as a number (i.e., 5000).

Answer 1

Calculation of total direct labor variance

Total direct labor variance equals the difference between the total budgeted cost of labor and the actual cost of labor, based on actual hours worked.

a. calculation of Budgeted labor cost to produce 7,000 statues:

Standard labor hours to produce actual output = SH = 5 hours x 7,000 statues = 35,000 hours

Standard labor rate per hour = SR = $23 per hour

Budgeted labor cost = SH x SR = 35,000 hours x $23 per hour = $805,000

b. Actual labor cost = $861,000 (Given in the question)

no need but still calculating-

Actual labor hours = AH = 41,000 hours

Actual labor rate per hour = AR = Actual total labor cost ÷ Actual total labor hours

= $861,000 ÷ 41,000 hours

= $21 per hour

.Actual labor cost = AH x AR = 41,000 hours x $21per hour = $861,000

Therefore, Total direct labor variance

= Actual labor cost to produce 7000 statutes - Budgeted labor cost to produce 7,000 statute

= $861,000 - $805,000

= $56,000 (Unfavourable)

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