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Financial & Managerial Accounting
Found in: Page 969
Financial & Managerial Accounting

Financial & Managerial Accounting

Book edition 7th
Author(s) John J Wild, Ken W. Shaw, Barbara Chiappetta
Pages 1096 pages
ISBN 9781259726705

Short Answer

Frontera Company’s output for the current period results in a $20,000 unfavorable direct labor rate variance and a $10,000 unfavorable direct labor efficiency variance. Production for the current period was assigned a $400,000 standard direct labor cost. What is the actual total direct labor cost for the current period?

The actual total direct labor cost for the current period is $430,000.

See the step by step solution

Step by Step Solution

Step 1: Meaning of Direct Labor

Direct labor denotes the labor force directly associated with the production department of a business concern. The cost spent by a business on its production department’s labor force is considered a direct cost in the books.

Step 2: Computation of actual total direct labor cost

ParticularsAmounts ($)
Standard direct labor cost 400,000
Add: Unfavorable direct labor rate variance20,000
Add: Unfavorable direct labor efficiency variance 10,000
Actual total direct labor cost $430,000

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