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

Question

Joe Malay received the following report on the Division's operation for the month of August: Direct labor rate variance $23,500 unfavorable. Direct labor efficiency variance- $66,000 (?) The standard calls for 280 direct labor hours per unit of output at $26.40 per labor hour. The standard direct labor hours for the units manufactured is 19.00% more than the total direct labor hours actuallu worked in Auaust vhat was the total standard cost applied to production? $413,368 $370,868 $42,500 $293,526 $347,368

Explanation / Answer

Solution: 413,368

Working:

Labor efficiency variance = 66,000 / 26.4 = 2500

actual hours = 2500 / 0.19 = 13,157.9

standard hours = 13,157.9 * 1.19 = 15,657.89

15,657.89 * 26.4 = 413,368

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