Question

Chicken Nuggets, LLC, provides chicken nuggets to fast food restaurants. The standard cost card for chicken nuggets indicates each nugget takes two ounces of chicken meat at $0.03 per ounce, 30 seconds of direct labor at $12.00 per hour, and 30 seconds of overhead at $6.00 per hour, for a total standard cost of $0.21 per nugget. Current production cost for 100,000 nuggets show material cost of $5,250 for 210,000 ounces of chicken at $0.025 per ounce; $10,560 for 800 hours of direct labor at $13.20 per hour; and $4,800 of overhead applied for 800 hours at $6.00 per hour. Legend: U = Unfavorable F = Favorable The direct labor efficiency variance is: $1,000 $9600 $5600 $440F $400F Please provide the explanation. Thank you! Show transcribed image text Expert Answer Shailesh answered this 905 answers Was this answer helpful? Was this answer helpful? Bo po Direct labor efficiency variance = standard rate x (standard hours - actual hours) Rate answer here. = $12 x (833.33 - 800) = $400 F Where, Standard hours = actual output x standard hours per unit of output = 100000 x (30/3600) = 833.33 hours Here, the variance is favorable because the actual hours taken are less than standard hours.

Can someone please explain where 3600 came from

Answer 1

Check the second line of the question. It is given that each nugget takes 30 seconds of direct labor. We have to convert that 30 seconds to hours. You know that there are 3600 seconds in an hour (60 sec * 60 min) So 30 sec was divided by 3600 seconds
Hope I'm clear about how 3600 came there. Comment if you have any queries. Will be available 24/7 for you