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Dodd Corporation used $90,000 of direct material, $112,000 of direct labor, and applied $104,000 of manufacturing overhead during July. Its beginning and ending work-in-process and finished goods inventories were as follows:

-The standard cost for direct labor is $190,000 if the company produces 15,200 units of product.Actual direct labor cost to produce 15,800 units of product totaled $213,300.What is the standard cost for direct labor at the actual level of production:
A)$190,000
B)$197,500
C)$205,200
D)$213,300

Question

Use the following to answer questions 
Dodd Corporation used $90,000 of direct material, $112,000 of direct labor, and applied $104,000 of manufacturing overhead during July. Its beginning and ending work-in-process and finished goods inventories were as follows:
 
-The standard cost for direct labor is $190,000 if the company produces 15,200 units of product.Actual direct labor cost to produce 15,800 units of product totaled $213,300.What is the standard cost for direct labor at the actual level of production:
A)$190,000 
B)$197,500 
C)$205,200 
D)$213,300

Quizplus · Accepted Answer

To calculate the standard cost for direct labor at the actual level of production, we need to use the formula:
Standard cost for direct labor = Standard direct labor cost per unit x Actual number of units produced
Standard direct labor cost per unit can be calculated as:
Standard direct labor cost per unit = Total standard direct labor cost / Number of units in the standard production run
Number of units in the standard production run = 15,200 (given)

Total standard direct labor cost = $190,000 (given)
Number of units produced = 15,800 (given)

Therefore,
Standard direct labor cost per unit = $190,000 / 15,200 = $12.50
Standard cost for direct labor at the actual level of production = $12.50 x 15,800 = $197,500

Hence, the best choice is B.

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