CH 10 I. Amethyst produces calculators. They uses a standard cost system to cont

Question

CH 10 I. Amethyst produces calculators. They uses a standard cost system to control the company's labor time. The following data pertains to the labor standard for one calculator Standard Hours Standard Rate Standard Cost S12 Per Calculator During a day 8000 calculators are produced by the company. Records show the following variances relating to the day: 0.25 $3 Labor e y variance...$1,200 F Which of the following is the correct actual hourly rate paid to labor for the day? A. $12.0 B. $14.5 C. $11.0 D. $13.5 E. None of above

Explanation / Answer

Answer:- In the following the correct actual hourly rate paid labor for the day is :- None of the above (Option E).

Explanation:-

Direct Labor Efficiency variance=(Standard hours-Actual hours)*Standard rate per hour

                        $1200 F =(2000 hours – X)*$12.00 per hour

                        $1200 F = $24000 –X *$12 per hour

                        Actual hours =$24000-$1200/$12 per hour

                        =1900 hours

Where:-

Standard Hours = No. of hours per unit*Actual output

                               = .25 hours per unit *8000 units =2000 hours

Direct Labor rate variance = (Standard rate – Actual rate) * Actual hours

                                    $1650 U   = ($12.00 per hour - X)* 1900 hours   

                                    $1650 U   = $22800- X*1900 hours

                                    Actual rate =$22800+$1650/1900 hours

                                      =$12.868421 per hour

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