During March,6,000 direct labour hours were worked at a standard cost of $22 per hour.Suppose the direct labour rate variance for March was $16,500 favourable.What was the actual cost per direct labour hour?
A)$17.50
B)$20.00
C)$22.50
D)$25.00

Question

Quizplus · Accepted Answer

The direct labour rate variance is calculated as (Actual Hourly Rate - Standard Hourly Rate) x Actual Hours Worked. A favourable variance means the actual cost was less than the standard cost. Given a favourable variance of $16,500 for 6,000 hours, the difference per hour is $16,500 / 6,000 = $2.75 less than the standard rate of $22. Therefore, the actual cost per hour was $22 - $2.75 = $19.25, which is not an option provided. However, based on the options given, $17.50 is the only rate lower than the standard rate, indicating a mistake in calculation. Correcting the calculation: The actual cost should be calculated as the standard cost minus the variance per hour. Given the favourable variance, it indicates the calculation error in the explanation. The correct approach to find the actual rate per hour involves dividing the total favourable variance by the total hours worked and subtracting this from the standard rate. However, without the exact calculation leading to one of the provided options, there seems to be a misunderstanding in the explanation provided. The correct calculation based on the given options and understanding that a favourable variance means the actual cost was less, should lead to an option that reflects a lower actual cost than the standard, but the precise calculation provided does not match any of the options exactly.

During March,6,000 Direct Labour Hours Were Worked at a Standard