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 favourable.What was the actual number of hours worked during the past period?
A) 20,500 hours.
B) 21,500 hours.
C) 22,500 hours.
D) 23,500 hours.

Question

Quizplus · Accepted Answer

The standard hours for the production of 9,000 units are calculated as 9,000 units * 2.5 hours/unit = 22,500 hours. A favourable labour efficiency variance indicates that the actual hours worked were less than the standard hours. The variance is calculated as (Standard Hours - Actual Hours) * Standard Rate. Given a favourable variance of $8,000 and a standard rate of $8 per hour, the variance in hours is $8,000 / $8 per hour = 1,000 hours. Therefore, the actual hours worked = Standard Hours - Variance in Hours = 22,500 hours - 1,000 hours = 21,500 hours.

The Standards for Direct Labour for a Product Are 2