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The standard cost of a product is to be reviewed. In the period used for the review, labour efficiency was 110% when the standard for labour was 5.5 hours per unit. It has been decided that this level of labour efficiency will be incorporated into the revised standard hours of the product.
What are the revised standard labour hours per unit for the product?
6.05
5.00
5.50
4.95Please do not simply type up a full question and expect to be provided with a full answer. You must have an answer in the same book in which you found the question, so in future ask about whatever it is in the answer that you are not clear about and I will explain.
As I explain in my free lectures on this, the efficiency ratio is the standard hours as a % of the actual hours taken.
You know from the question that the original standard hours were 5.5 hours and you know that the ratio is 110%. So from that you can calculate what the actual hours taken per unit were and this then becomes the new, revised standard hours.
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