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Misterio Company uses a standard costing system. During the past quarter, the following variances were computed: Misterio applies variable overhead using a standard rate of $2 per direct labor hour allowed. Two direct labor hours are allowed per unit produced. (Only one type of product is manufactured.) During the quarter, Misterio used 30 percent more direct labor hours than should have been used. Required: 1. What were the actual direct labor hours worked? The total hours allowed? 2. What is the standard hourly rate for direct labor? The actual hourly rate? 3. How many actual units were produced?

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Cornerstones of Cost Management (C...

4th Edition
Don R. Hansen + 1 other
Publisher: Cengage Learning
ISBN: 9781305970663

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Chapter
Section
BuyFindarrow_forward

Cornerstones of Cost Management (C...

4th Edition
Don R. Hansen + 1 other
Publisher: Cengage Learning
ISBN: 9781305970663
Chapter 9, Problem 31P
Textbook Problem
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Misterio Company uses a standard costing system. During the past quarter, the following variances were computed:

Chapter 9, Problem 31P, Misterio Company uses a standard costing system. During the past quarter, the following variances

Misterio applies variable overhead using a standard rate of $2 per direct labor hour allowed. Two direct labor hours are allowed per unit produced. (Only one type of product is manufactured.) During the quarter, Misterio used 30 percent more direct labor hours than should have been used.

Required:

  1. 1. What were the actual direct labor hours worked? The total hours allowed?
  2. 2. What is the standard hourly rate for direct labor? The actual hourly rate?
  3. 3. How many actual units were produced?

1.

To determine

Calculate the actual direct labor hours worked and the total hours allowed.

Explanation of Solution

Calculate the actual direct labor hours worked:

Use variable overhead efficiency variance formula to calculate actual direct labor hour.

Step 1: Calculate the standard hours.

Variable overheadefficiency variance} = [(AHSH)×SVOR]$24,000 = [(1.3 SHSH)×$2]$24,000 = [0.3SH×$2]$24,000  = 0.6 SHSH=($24,0000

2.

To determine

Calculate the standard hour rate for direct labor and the actual hour rate.

3.

To determine

Calculate the number of actual units produced.

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Chapter 9 Solutions

Cornerstones of Cost Management (Cornerstones Series)
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