Expected, Standard, and Actual Labor Hours

question 6

Essay

Expected, Standard, and Actual Labor Hours
The Pizza Company makes two types of frozen pizzas: pepperoni and cheese. The Pizza Company allocates overhead to these two products based on the number of direct labor hours. The direct labor hours per unit for making a pepperoni pizza is 5 minutes or 1/12 of an hour. The direct labor hours per unit for making a cheese pizza is 4 minutes or 1/15 of an hour. At the start of the year the Pizza Company expected to make 12,000 pepperoni pizzas and 6,000 cheese pizzas. During the year, the Pizza Company actually made 9,000 pepperoni pizzas and 7,500 cheese pizzas. The time cards indicate that direct laborers worked for 1,300 hours. What are the total expected direct labor hours, standard direct labor hours, and actual direct labor hours?

---

Definitions:

Cash Inflows

Money received by a business from its operational, investing, and financing activities.

Discount Rate

The rate utilized in calculating the present value of anticipated future cash flows in discounted cash flow analysis.

Salvage Value

The estimated resale value of an asset at the end of its useful life, used in computing depreciation.

Discount Rate

In finance, this rate is used to calculate the present value of future cash flows; in a broader context, it can also refer to the interest rate charged by banks to their most creditworthy customers.