The Fischer Corporation uses a standard costing system. The following data have been assembled for December: The standard hours allowed for December's production is:
A)5,400 hours
B)5,600 hours
C)5,800 hours
D)6,000 hours

Question

The Fischer Corporation uses a standard costing system. The following data have been assembled for December:  The standard hours allowed for December's production is:
A)5,400 hours 
B)5,600 hours 
C)5,800 hours 
D)6,000 hours

Quizplus · Accepted Answer

The standard hours allowed can be calculated as follows:
Standard hours per unit = 3 hours
Actual units produced = 1,800
Therefore, standard hours allowed = 3 × 1,800 = 5,400
However, there was an unfavorable efficiency variance, which means that the actual hours worked were more than the standard hours allowed. The calculation is as follows:
Actual hours worked = 5,600 + (500 × $16) = 5,600 + $8,000 = 6,100
Therefore, the standard hours allowed for December's production is 5,600 hours.

The Fischer Corporation Uses a Standard Costing System