Levram Company uses a standard costing system. During the past year, the followi

Question

Levram Company uses a standard costing system.

During the past year, the following variances were calculated:

Direct labor rate variance ...................... $23,000 Unfavorable

Direct labor efficiency variance ................ $43,500 Unfavorable

Variable overhead efficiency variance ........... $30,000 Unfavorable

The standard variable overhead rate is $4 per direct labor hour.

During the past year, Levram used 15% more direct labor hours than should have been used given the standards.

Calculate the actual direct labor hours worked by Levram Company during the past year.

Explanation / Answer

Let standard labour hours be x Actual Labour hours 1.15x VOEV = (SH-AH)SR -30,000 = (x-1.15x)4 -7500 = -.15x x= 50,000 Hours Standard Labour hours          50,000.00 Actual Labour hrs=1.15x= 1.15*50,000          57,500.00

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