Question 11.4: Pizzazz Pizza makes two types of frozen pizzas, pepperoni an...
Pizzazz Pizza makes two types of frozen pizzas, pepperoni and cheese. The company allocates overhead to these two products based on the number of direct labor hours. The direct labor hours per unit to make a pepperoni pizza is 5 minutes, or one-twelfth of an hour. The direct labor hours per unit to make a cheese pizza is 4 minutes, or one fifteenth of an hour. At the start of the year, Pizzazz Pizza expected to make 12,000 pepperoni pizzas and 6,000 cheese pizzas. During the year, the firm actually made 9,000 pepperoni pizzas and 7,500 cheese pizzas. The payroll system indicates that direct laborers worked for 1,300 hours. What are the total budgeted direct labor hours, standard direct labor hours, and actual direct labor hours?
Budgeted number of direct labor hours based on budgeted production
| Pepperoni (12,000 × 1/12) | 1,000 |
| Cheese (6,000 × 1/15) | 400 |
| Total | 1,400 |
Standard number of direct labor hours based on actual production
| Pepperoni (9,000 × 1/12) | 750 |
| Cheese (7,500 × 1/15) | 500 |
| Total | 1,250 |
| Actual number of direct labor hours | 1,300 |