The standard number of hours that should have been worked for the output attained is 6000 direct labor hours and the actual number of direct labor hours worked was 6300. If the direct labor price variance was $3150 unfavorable and the standard rate of pay was $9 per direct labor hour what was the actual rate of pay for direct labor?
A) $8.50 per direct labor hour
B) $7.50 per direct labor hour
C) $9.50 per direct labor hour
D) $9.00 per direct labor hour

Question

Quizplus · Accepted Answer

First, we need to calculate the standard labor cost for the actual hours worked:
Standard labor cost = Standard rate x Actual hours
Standard labor cost = $9 x 6300 = $56,700

Next, we need to calculate the actual labor cost for the actual hours worked:
Actual labor cost = Standard labor cost + Labor price variance
Actual labor cost = $56,700 - $3,150 = $53,550

Finally, we can calculate the actual rate of pay:
Actual rate of pay = Actual labor cost / Actual hours
Actual rate of pay = $53,550 / 6300 = $8.50 per direct labor hour.

Therefore, the actual rate of pay for direct labor is option C) $9.50 per direct labor hour.

The Standard Number of Hours That Should Have Been Worked