Question

In: Accounting

Prokp Co.'s records for April disclosed the following data relating to direct labor: Actual labor cost...

Prokp Co.'s records for April disclosed the following data relating to direct labor: Actual labor cost (payroll) for April$20,000 Labor rate variance$4,000favorable Labor efficiency variance$2,400unfavorable Actual direct labor hours worked (AQ) 1,000 Prokp's total standard direct labor hours allowed (SQ) for units produced in April (to nearest whole number) were:

Multiple Choice1,100 890 1,000 900 1,110.

Expert Solution

Answer)

Calculation of Standard Direct Labor hours Allowed for Actual output

Labor Efficiency variance = (Standard direct labor hours allowed for actual output – Actual direct labor hours worked) X Standard rate per direct labor hour

- $ 2,400 = (Standard direct labor hours allowed for actual output – 1,000) X $ 24

-$ 2,400/ $ 24 = (Standard direct labor hours allowed for actual output – 1,000)

- 100 = (Standard direct labor hours allowed for actual output – 1,000)

Standard Direct Labor hours allowed for actual output = 1,000 – 100

= 900

Therefore Standard direct labor hours allowed for Actual output is 900

Working Note:

Calculation of Actual Labor rate per hour:

Actual labor rate per hour = Total direct labor cost/ Total direct Labor hours worked

= $ 20,000/ 1,000 labor hours

= $ 20 per direct labor hour

Calculation of Standard Labor rate per hour:

Labor rate variance = (Standard Labor rate per hour – Actual Labor rate per hour) X Actual Labor hours worked

$ 4,000 = (Standard Labor rate per hour - $ 20.00) X 1,000 labor hours

$ 4,000 = (Standard Labor rate per hour X 1,000) – ($ 20.00 X 1,000 labor hours)

$ 4,000 = (Standard Labor rate per hour X 1,000) – $ 20,000

$ 24,000 = (Standard Labor rate per hour X 1,000)

Standard Labor rate per hour = $ 24.00

ekkarill92 answered 2 years ago

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