During January,7,000 direct labour hours were worked at a standard cost of $20 per hour.If the direct labour rate variance for January was $17,500 favourable,what would be the actual cost per direct labour hour?
A)$17.50
B)$20.00
C)$22.50
D)$25.00

Question

Quizplus · Accepted Answer

The actual cost per direct labour hour can be calculated by first determining the total standard cost, which is 7,000 hours * $20/hour = $140,000. A favourable variance of $17,500 means the actual cost was less than the standard cost by this amount. Therefore, the actual cost was $140,000 - $17,500 = $122,500. Dividing this by the 7,000 hours gives an actual cost per hour of $17.50.

During January,7,000 Direct Labour Hours Were Worked at a Standard