The standard number of hours that should have been worked for the output attained is 8,000 direct labour hours and the actual number of direct labour hours worked was 8,400.If the direct labour price variance was $8,400 unfavourable, and the standard rate of pay was $18 per direct labour hour, what was the actual rate of pay for direct labour?
A)$17.00 per direct labour hour
B)$15.00 per direct labour hour
C)$19.00 per direct labour hour
D)$18.00 per direct labour hour

Question

Quizplus · Accepted Answer

The actual rate of pay can be calculated by first determining the total actual cost of direct labour, which is the sum of the standard cost for the actual hours worked and the variance. The standard cost for the actual hours worked is 8,400 hours * $18/hour = $151,200. The total actual cost is $151,200 + $8,400 (unfavourable variance) = $159,600. Dividing this total actual cost by the actual hours worked (8,400 hours) gives the actual rate of pay: $159,600 / 8,400 hours = $19.00 per direct labour hour.

The Standard Number of Hours That Should Have Been Worked