The standards for direct labour for a product are 2.5 hours at $8 per hour.Last month,9,000 units of the product were made and the labour efficiency variance was $8,000 F.The actual number of hours worked during the past period was:
A) 20,500.
B) 21,500.
C) 22,500.
D) 23,500.

Question

Quizplus · Accepted Answer

The total standard hours for 9,000 units at 2.5 hours per unit is:
9,000 x 2.5 = 22,500 hours

Let AH be the actual hours worked.

The labour efficiency variance is:
LEV = (AH - SH) x SR
where SR is the standard labour rate (which is $8 per hour)

From the information given, we know that:
LEV = $8,000 F
SH = 22,500 hours
SR = $8 per hour

Therefore, we can rearrange the formula for the labour efficiency variance to solve for AH:

AH = SH + (LEV/SR)
AH = 22,500 + ($8,000/-$8)
AH = 22,500 - 1,000
AH = 21,500

Therefore, the actual number of hours worked during the past period was 21,500.

The Standards for Direct Labour for a Product Are 2