Kraft Kustom Kites located in Cincinnati, Ohio has the following standards for m

Question

Kraft Kustom Kites located in Cincinnati, Ohio has the following standards for making its most popular kite. The direct labor standards are 0.6 hours per unit and $29 per hour. In April the company produced 7,400 units using 3,940 direct labor-hours. The actual direct labor cost was $82,740.

$14,500 F

$14,500 U

$46,020 U

$46,020 F

Kraft Kustom Kites located in Cincinnati, Ohio has the following standards for making its most popular kite. The direct labor standards are 0.6 hours per unit and $29 per hour. In April the company produced 7,400 units using 3,940 direct labor-hours. The actual direct labor cost was $82,740.

Explanation / Answer

Standard hours required to produce 7400 units = 7400 * 0.6 = 4440

Actual hours taken = 3940

Standard rate per labor hour = 29

Labor efficiency variance = (Standard hours - Actual Hours) * Standard rate

= (4440 - 3940) * 29

= 14500 F

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