Question

Zero​ Waste, Inc. manufactures eco friendly snack containers. The company uses standard costs to judge performance. Recently an employee mistakenly threw away some of the production records for the previous operating period and only partial data exists. The company documented a favorable total direct labor variance of​ $300 for the​ period, actual direct labor hours logged of​ 6,000, and actual direct labor costs of​ $62,400. The actual direct labor rate was​ $0.60 less per hour than expected. How many containers were produced during the period assuming a standard direct labor unit cost of​ $2.20?

A. ​28,228

B. 31,999

C. 30,136

D. 82,500

E. ​28,500

Answer 1

Total direct labor variance = $300

Actual direct labor hour = 6,000

Actual direct labor cost = $62,400

Actual direct labor rate = Standard rate - 0.6

Standard direct labor cost per unit = $2.20

Actual output = ?

Actual direct labor rate = Actual direct labor cost/Actual direct labor hour

= 62,400/6,000

= $10.4 per hour

Actual rate = Standard rate - 0.6

10.4 = Standard rate - 0.6

Standard rate = $11 per direct labor hour

Standard time = Standard direct labor cost per unit/Standard rate

= 2.20/11

= 0.2 hour per unit

Standard time for actual output = Standard time x Actual output

= 0.2 Actual output

Total direct labor variance = (Standard rate x Standard time for actual output ) - Actual direct labor cost

300 = (11 x 0.2 Actual output ) - 62,400

2.2 Actual output = 62,700

Actual output = 28,500 units

Correct option is (E)