Krizun Industries makes heavy construction equipment. The standard for a particular crane calls for 20 direct labor-hours at $24 per direct labor-hour. During a recent period 875 cranes were made. The labor efficiency variance was $1,200 Unfavorable. How many actual direct labor-hours were worked?

Question

Quizplus · Accepted Answer

The labor efficiency variance is calculated as (Actual Hours - Standard Hours) x Standard Rate. The standard hours for 875 cranes is 875 x 20 = 17,500 hours. The variance is $1,200 Unfavorable, so (Actual Hours - 17,500) x $24 = $1,200. Solving for Actual Hours gives 17,550 hours.

Krizun Industries Makes Heavy Construction Equipment