Mandy Company has the following information from last month:

Standard direct labor hours allowed for units produced (SQ) 3,900 Actual direct labor hours worked (AQ) 3,780 Direct labor efficiency variance, favorable (F)$6,960 Total payroll$241,920

What was Mandy's direct labor flexible-budget variance for the month, rounded to the nearest dollar?

$15,720 unfavorable

1. AP = total payroll (actual direct labor cost)/actual hours worked = $241,920 (given)/3,780 hours (given) = $64.00/hour

2. Direct labor efficiency variance = (AQ ? SQ) × SP = $6,960 (given).

3. AQ = 3,780 hours (given); SQ = 3,900 hours (given).

4. AQ ? SQ = 3,780 hours ? 3,900 hours = 120 hours

5. Therefore, SP = $6,960/120 hours = $58.00/hour

6. Labor rate variance = (AP ? SP) × AQ = ($64.00 ? $58.00)/hour × 3,780 hours = $22,680 unfavorable.

7. Direct labor FB variance = Total direct labor variance = Rate variance + Efficiency variance = $22,680U + $6,960F = $15,720U.

8. Alternatively, direct labor FB variance = actual direct labor cost ? FB for direct labor cost (based on output) = $241,920 ? (3,900 standard allowed hours × $58.00/hour) = $241,920 ? $226,200 =$15,720U (rounded to nearest dollar).
Note: the variance here is unfavorable (U) because the actual direct labor cost > the flexible budget (FB) for direct labor (based on output).