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

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

    

  Actual direct labor hours 59,000     
  Total direct labor payroll $ 354,000     
  Efficiency variance $ 2,640 F
  Rate variance $ 94,400 U

    

What were the standard direct labor hours for February?

Multiple Choice

  • 59,600.

  • 58,040.

  • 58,400.

  • 59,960.

Business   Accounting   
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Homework Answers

Answer #1

Actual hours = AH

Actual rate per hour = AR

Standard hours = SH

Standard rate = SR

Actual Direct Labor hours (AH) = 59,000

Total Direct Labor cost (AH * AR) = $354,000

Efficiency Variance = SR * (SH - AH) = $2,640

Rate Variance = AH * (SR - AR) = - $94,400

Substituting AH and AR in rate variance we get

(59,000 * SR) - $354,000 = - $94,400

SR = $4.40

Substituting SR = $4.40 in Efficiency variance

$4.40 * (SH - 59,000) = $2,640

SH - 59,000 = 600

SH = 59,600 hours

Option '1' is correct

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