Porter Manufacturing Company uses a standard cost accounting system. In 2011, th
ID: 2587364 • Letter: P
Question
Porter Manufacturing Company uses a standard cost accounting system. In 2011, the company produced 20,000 units. Each unit took several pounds of direct materials and 3 standard hours of direct labor at a standard hourly rate of $14. Normal capacity was 50,000 direct labor hours. During the year, 54,038 pounds of raw materials were purchased at $1.5 per pound. All materials purchased were used during the year.
If the direct labor quantity variance was $5,200 unfavorable, what were the direct labor hours actually worked?
Explanation / Answer
Standard hours per unit = 3
Standard rate per hour = 14
Direct labour quantity variance = 5,200 Unfavourable
Direct labour quantity variance = (Standard hours - Actual hours) * Standard rate
= [(20,000 * 3) - Actual hours] * 14
- 5,200 = [(20,000 * 3) - Actual hours] * 14
- 5,200 = (60,000 - Actual hours) * 14
- 5,200 = 840,000 - 14 * Actual hours
Actual hours = 60,371