Question

Cost standards for one unit of product no. C77: Direct material 3 pounds at $2.50 per pound $ 7.50 Direct labor 6 hours at $7.30 per hour 43.80 Actual results: Units produced 6,800 units Direct material purchased 26,800 pounds at $2.70 $ 72,360 Direct material used 20,100 pounds at $2.70 54,270 Direct labor 41,300 hours at $7.10 293,230 Assume that the company computes variances at the earliest point in time. The standard hours allowed for the work performed are _________.

Answer 1

The standard hours allowed for the work performed are 40,800

Step-by-step explanation:

In the question we have been told to assume that the company computes variance at the earliest point of time, so it is important to understand what it actually means. When a company is comparing the budgeted amounts that it has set earlier with the actual amounts that have come, this process is called variance, and a company can only do this when the actual amounts have been completed.

For taking out the standard hours allowed we will multiply the total units produced by the set the direct labor hours,

6,800 x 6 = 40,800 dlh,

so therefore the standard hours allowed are 40,800.