loe Malay received the following report on the Division\'s operation for the mon

Question

loe Malay received the following report on the Division's operation for the month of August: Direct labor rate variance $27,000 unfavorable. Direct labor efficiency variance $76,000 () The standard calls for 3.20 direct labor hours per unit of output at $29.90 per labor hour. The standard direct labor hours for the units manufactured is 22.00% more than the total direct labor hours actually worked in August. What was the total standard cost applied to production? $49,000 $372,455 $421,455 $345,455 $297,091

Explanation / Answer

Direct Labor efficiency variance = (Standard hours - Actual hours) x Standard Rate
$76,000 = (3.20X - 2.62X) x $29.90
X = 4,404.83

Standard hours = 3.2 X 4,404.83 = 14,095.47

Total standard cost applied to production = 14,095.47 x $29.90 = $421,455

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