Problem
Powers Company prepared static budget for May with an expectation of producing and selling 10,000 units. Assume that the standard cost to make one finished unit includes 4 hour of direct labor at $7 per hour. During May, 44,000 direct labor-hours were worked, 10,500 units of product were manufactured, and total direct labor cost was $330,000.
1. What did Powers budget for May direct labor costs (the static budget amount)?
2. How much would Powers spend on direct labor in May to have a zero flexible budget variance?