The Frosty Company makes mugs for which the following standards have been developed: $$\begin{array} { l l l }
& \text { Standard Inputs } & \text { Standard Price } \
& \text { Expected for E ach } & \text { Expected per } \
& \text { Unit of Output } & \text { Unit of Output } \
\text { Direct materials } & 5 \text { ounces } & \$ 2 \text { per ounce } \
\text { Direct labor } & 2.5 \text { hours } & \$ 10 \text { per hour }
\end{array}$$ Production of 400 mugs was expected in August, but 440 mugs were actually completed. Direct materials purchased and used were 2,100 ounces at an actual price of $2.20 per ounce. Direct labor cost for the month was $5,310, and the actual pay per hour was $9.00. _ is the standard labor cost for each mug produced.
A) $25
B) $22.50
C) $1
D) $10

Question

The Frosty Company makes mugs for which the following standards have been developed: $$\begin{array} { l l l } 
& \text { Standard Inputs } & \text { Standard Price } \
& \text { Expected for E ach } & \text { Expected per } \
& \text { Unit of Output } & \text { Unit of Output } \
\text { Direct materials } & 5 \text { ounces } & \$ 2 \text { per ounce } \
\text { Direct labor } & 2.5 \text { hours } & \$ 10 \text { per hour }
\end{array}$$ Production of 400 mugs was expected in August, but 440 mugs were actually completed. Direct materials purchased and used were 2,100 ounces at an actual price of $2.20 per ounce. Direct labor cost for the month was $5,310, and the actual pay per hour was $9.00. _ is the standard labor cost for each mug produced.
A) $25
B) $22.50
C) $1
D) $10

Quizplus · Accepted Answer

The standard labor cost for each mug is calculated by multiplying the standard hours per mug (2.5 hours) by the standard rate per hour ($10), which equals $25.

The Frosty Company Makes Mugs for Which the Following Standards