Bandolero Corporation has developed ideal standards for four activities: labor, materials, inspection, and receiving. Information is as follows: The actual prices paid per unit of each activity driver were equal to the standard prices. The value-added costs for
Labor are
A) $792,000.
B) $900,000.
C) $84,000.
D) $75,000.

Question

Bandolero Corporation has developed ideal standards for four activities: labor, materials, inspection, and receiving. Information is as follows:  The actual prices paid per unit of each activity driver were equal to the standard prices. The value-added costs for
Labor are
A) $792,000. 
B) $900,000. 
C) $84,000. 
D) $75,000.

Quizplus · Accepted Answer

To calculate the value-added costs for labor, we need to multiply the actual hours of labor by the difference between the standard labor rate and the hourly wage rate.

Value-added costs for labor = Actual labor hours x (Standard labor rate - Hourly wage rate)

From the information given, we know that the actual labor hours are 30,000, the standard labor rate is $50, and the hourly wage rate is $20.

So, value-added costs for labor = 30,000 x ($50 - $20)

= 30,000 x $30

= $900,000

Therefore, the answer is B) $900,000.

Bandolero Corporation Has Developed Ideal Standards for Four Activities: Labor