Krizum Industries makes heavy construction equipment. The standard for a particu

Question

Krizum Industries makes heavy construction equipment. The standard for a particular crane calls for 31 direct labor-hours at $15 per direct labor-hour. During a recent period 1,850 cranes were made. The labor rate variance was zero and the labor efficiency variance was $6,300 unfavorable. How many actual direct labor-hours were worked?

A) 63,650

B) 57,350

C) 57,770

D) 55,500

Krizum Industries makes heavy construction equipment. The standard for a particular crane calls for 31 direct labor-hours at $15 per direct labor-hour. During a recent period 1,850 cranes were made. The labor rate variance was zero and the labor efficiency variance was $6,300 unfavorable. How many actual direct labor-hours were worked?

Explanation / Answer

Answer:

Correct Answer is (C) 57,770 Hours

Here is working and calculation

Standard Direct Labour Hours for a crane = 31 Hours

Standard Rate per Direct Labour Hour = $15 per hour

Actual Cranes made during the period = 1,850 Cranes

Standard Direct Labour Hours for Actual Output = 1,850 Cranes x 31 Hours per Crate = 57,350 Hours

Labour Efficiency Variance = Standard Rate x (Standard Hours for Actual Output – Actual Hours) = -$6,300

-$6,300 = $15 (57,350 – Actual Hours)

-$6,300 = $860,250 – Actual Hours x $15

Actual Hours = ($860,250 + $6,300) / $15 = 57,770 Hours

Actual Direct Labour Hours worked = 57,770 Hours

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