During the current month, Ringo Company started 50,000 units of product and transferred 40,000 fully completed units to finished goods. The final work in process inventory was 40 percent complete as to labor operations. There was no initial work in process, and actual labor hours were 180,000 for the period. Each unit should have required 4 direct labor hours to be produced at standard. The total standard hours allowed for the period are
A) 180,000.
B) 176,000.
C) 171,000.
D) 186,000.

Question

Quizplus · Accepted Answer

The total standard hours allowed are calculated by considering the completed units and the equivalent units in ending inventory. For 40,000 completed units, the standard hours are 40,000 units * 4 hours/unit = 160,000 hours. For the 10,000 units in ending inventory (50,000 started - 40,000 completed), which are 40% complete, the equivalent units are 10,000 * 40% = 4,000 units. Thus, the standard hours for these are 4,000 units * 4 hours/unit = 16,000 hours. Total standard hours allowed = 160,000 + 16,000 = 176,000 hours.

During the Current Month, Ringo Company Started 50,000 Units of Product