Question

The Fime Corporation uses a standard costing system. The following data have been assembled for December:

Actual direct labor-hours worked		5,600	hours
Standard direct labor rate	$	10	per hour
Labor efficiency variance	$	1,500	Unfavorable

The standard hours allowed for December’s production is:

Multiple Choice

• 5,450 hours

• 5,600 hours

• 5,750 hours

• 5,300 hours

Answer 1

Answer :- Calculation of the standard hours allowed for December's Production:-

Labor Efficiency Variance = ( Actual hours-Standard hours) * Standard rate

$1,500 Unfavorable = ( 5,600 - Standard hours ) * $10

$1500/$10 = ( 5,600 - Standard hours)

150 U = 5,600 - Standard hours

Standard hours = 5,600 - 150

Standard hours = 5,450 hours

So the correct answer is option A. ( 5,450 hours)

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