Standard hours allowed
Standard hours allowed: the labour or machine hours that should have been used for the output actually produced, computed as actual output achieved multiplied by standard hours per unit.
See it move
A factory's standard is 4 direct labour hours per unit. It actually produces 950 units this month, so standard hours allowed is 950 × 4 = 3,800 hours — the hours that output should have taken. The original budget assumed only 900 units, which would have implied 3,600 hours, but actual output, not budgeted output, sets this figure.
The formula
Variables
- Standard hours allowed (hours)
- Actual output achieved (units)
- Standard hours per unit (hours/unit)
Gives the hours that should have been used for the output actually achieved; it is always based on actual output, never budgeted output.
Check yourself
A plant's standard is 2.5 machine hours per unit. This month it actually produced 3,400 units, although the original budget had assumed output of 3,200 units, and the plant actually worked 8,900 machine hours to produce that output. What is the standard hours allowed for the month?