Krizun Industries makes heavy construction equipment. The standard for a particular crane calls for 17 direct labor-hours at $15 per direct labor-hour. During a recent period 1,150 cranes were made. The labor efficiency variance was $4,800 Unfavorable. How many actual direct labor-hours were worked?
Multiple Choice
Explanation
Labor efficiency variance = (AH – SH) × SR
$4,800 U = [AH – (1,150 cranes × 17 hours per crane)] × $15 per hour
$4,800 = [AH – (1,150 cranes × 17 hours per crane)] × $15 per hour
$4,800 = [AH – (19,550 hours)] × $15 per hour
$4,800 = (AH × $15 per hour) – $293,250
AH × $15 per hour = $293,250 + $4,800
AH × $15 per hour = $298,050
AH = $298,050 ÷ $15 per hour
AH = 19,870 hours
