Piper Corporation's standards call for 1,000 direct labor-hours to produce 250 units of product. During October the company worked 1,250 direct labor-hours and produced 300 units. The standard hours allowed for October would be:
A) 1,250 hours
B) 1,000 hours
C) 1,200 hours
D) 1,300 hours

Question

Quizplus · Accepted Answer

The standard hours allowed can be calculated using the formula: 
Standard hours allowed = (Actual output / Standard output) x Standard direct labor hours
Standard output = (Direct labor-hours required to produce standard output / Standard output quantity) x Actual output quantity

Given:
Standard output quantity = 250 units
Direct labor-hours required to produce standard output = 1,000 hours
Actual output = 300 units
Actual direct labor-hours = 1,250 hours

Using the above formulae we get, 
Standard output = (1000 / 250) x 300 = 1200 units
Standard hours allowed = (300/1200) x 1000 = 250 x 4 = 1200 hours

Hence, the answer is C.

Piper Corporation's Standards Call for 1,000 Direct Labor-Hours to Produce