Lucky Company's direct labor information for the month of February is as follows:
Actual direct labor hours worked (AQ) 61,500 Standard direct labor hours allowed (SQ) 63,000 Total payroll for direct labor$774,900 Direct labor efficiency variance$18,000
The total standard direct labor cost allowed for February, rounded to the nearest dollar, was:
$756,000
1. Direct labor efficiency variance = (AQ ? SQ) × SP
2. Therefore, standard direct labor rate per hour, SP = Efficiency variance/(AQ ? SQ) = $18,000/(61,500 hours ? 63,000 hours) = $12.00 per hour.
3. Standard direct labor cost allowed = SP × SQ = $12.00/hour × 63,000 hours (given) = $756,000 (rounded to nearest whole dollar)
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