Direct Labor Standards for Nonmanufacturing Expenses St. Luke Hospital began usi

Question

Direct Labor Standards for Nonmanufacturing Expenses St. Luke Hospital began using standards to evaluate its Admissions Department. The standard was broken into two types of admissions as follows: The unscheduled admission took longer, since name, address, and insurance information needed to be determined at the time of admission. Information was collected on scheduled admissions prior to the admissions, which was less time consuming. The Admissions Department employs two full-time people (40 productive hours per week, with no overtime) at dollar 12 per hour. For the most recent week, the department handled 88 unscheduled and 228 scheduled admissions. How much was actually spent on labor for the week? What are the standard hours for the actual volume for the week (round to the nearest whole hour)? Calculate the time variance. In your computation, round the standard direct labor rate to the nearest whole cent. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number

Explanation / Answer

b) Standard hour for actual vloume :

Unscheduled = 88*30min = 44hr

Scheduled = 228*10min = 38hr

Total standard hours = 44+38 = 82 hours

c) Standard hours for actual work = 82hours

Actual hours taken for the work = 80hours (2*40)

Therefore Time variance = (82-80)*12 = $24

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