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4. Krizum Industries makes heavy construction equipment. The standard for a particular crane calls for 12...

4.

Krizum Industries makes heavy construction equipment. The standard for a particular crane calls for 12 direct labor-hours at $28 per direct labor-hour. During a recent period 1,820, cranes were made. The labor rate variance was zero and the labor efficiency variance was $19,600 unfavorable. How many actual direct labor-hours were worked?

A. 36,790

B. 21,840

C. 21,440

D. 22,540

Business   Accounting   
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Answer #1

Standard labor-hours per unit = 12
Standard labor rate per hour = $28
Actual number of units produced = 1,820

Standard labor-hours allowed = Standard labor-hours per unit * Actual number of units produced
Standard labor-hours allowed = 12 * 1,820
Standard labor-hours allowed = 21,840

Labor Efficiency Variance = Standard labor rate per hour * (Actual labor-hours - Standard labor-hours allowed)
$19,600 = $28 * (Actual labor-hours - 21,840)
700 = Actual labor-hours - 21,840
Actual labor-hours = 22,540

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