The standard number of hours that should have been worked for the output attained is 10000 direct labor hours and the actual number of direct labor hours worked was 10500. If the direct labor price variance was $10500 unfavorable and the standard rate of pay was $12 per direct labor hour what was the actual rate of pay for direct labor?
A) $11 per direct labor hour
B) $9 per direct labor hour
C) $13 per direct labor hour
D) $12 per direct labor hour

Question

Quizplus · Accepted Answer

The formula for direct labor price variance is:

(Direct labor actual hours x Actual rate) - (Direct labor actual hours x Standard rate)

We know that the direct labor price variance was $10,500 unfavorable and the standard rate of pay was $12 per direct labor hour. We also know that the actual number of direct labor hours worked was 10,500.

Substituting these values into the formula, we get:

(10,500 x Actual rate) - (10,500 x 12) = -10,500

Simplifying:

10,500(Actual rate - 12) = -10,500

Actual rate - 12 = -1

Actual rate = $11 per direct labor hour

Therefore, the answer is C.

The Standard Number of Hours That Should Have Been Worked