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The Workweek is a local clothing manufacturer that makes men's dress pants. Below is some actual vs. budget information for The Workweek's pants for the
The Workweek is a local clothing manufacturer that makes men's dress pants. Below is some actual vs. budget information for The Workweek's pants for the month of May. Assume no beginning/ending inventories for simplicity. The cost-allocation base for both variable and fixed overhead is direct labor-hours.
Data for the Month of May | ||
Static | ||
(1 unit = 1 pair of pants) | Actual | Budget |
# Pairs pants made and sold | 4,625 | 4,300 |
Selling price per pair | $47 | $49 |
Yards of fabric per pair | 2.5 | 2.4 |
Cost per yard of fabric | $4.67 | $4.51 |
Time in hours to sew one pair | 0.65 | 0.75 |
Cost of direct labor (per hour) | $17 | $16 |
Variable overhead costs | $3,825 | $3,200 |
(utilities, sewing machine maintenance, etc.) | ||
Fixed overhead costs | $9,000 | $8,600 |
(store rent, insurance, etc.) |
What is the price variance for direct labor?
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