Question

Information for Bonanza Company's direct labor cost for February is as follows: Actual direct labor hours...

Information for Bonanza Company's direct labor cost for February is as follows:

Actual direct labor hours 81,000
Total direct labor payroll $ 526,500
Efficiency variance $ 5,936 F
Rate variance $ 97,200 U

What were the standard direct labor hours for February?

Multiple Choice

  • 84,120

  • 82,120

  • 81,000

  • 83,520

Business   Accounting   
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Homework Answers

Answer #1

Correct answer------------82,120

Working

To solve this answer we will first solve what is Standard rate then we solve standard quantity

We know actual rate as (526500/81000= $6.50)

now

LRV= (SR-AR) x ALH

LRV= -97200

-97200= (SR-6.5) x 81000

SR=6.50- (97200/81000)

SR= 5.30

.

We will now calculate standard quantity using labor efficiency variance

LEV=(SLH-ALH) x SR

LEV= (SLH- 81000) x 5.30

5936= ((SLH- 81000) x 5.30

SLH= 81000+(5936/5.3)

SLH= 81000+1120

SLH= 82120

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