Bear Company uses a standard costing system. The following information pertains to direct labour costs for the month of March:
$$\begin{array} { l l }
\text { Standard direct labour rate per hour } & \$ 15.00 \
\text { Actual direct labour rate per hour } & \$ 13.50 \
\text { Labour rate vari ance } & \$ 18,000 \text { favourable } \
\text { Actual output } & 1,000 \text { units } \
\text { Standard hours allowed for actual production } & 10,000 \text { hours }
\end{array}$$
-Refer to the Figure.How many actual labour hours were worked during March for Bear Company?
A)1,200 hours
B)2,000 hours
C)10,000 hours
D)12,000 hours

Question

Bear Company uses a standard costing system. The following information pertains to direct labour costs for the month of March:
 $$\begin{array} { l l } 
\text { Standard direct labour rate per hour } & \$ 15.00 \
\text { Actual direct labour rate per hour } & \$ 13.50 \
\text { Labour rate vari ance } & \$ 18,000 \text { favourable } \
\text { Actual output } & 1,000 \text { units } \
\text { Standard hours allowed for actual production } & 10,000 \text { hours }
\end{array}$$
-Refer to the Figure.How many actual labour hours were worked during March for Bear Company?
A)1,200 hours
B)2,000 hours
C)10,000 hours
D)12,000 hours

Quizplus · Accepted Answer

The labour rate variance is calculated as (Standard Rate - Actual Rate) * Actual Hours Worked. Given a favourable variance of $18,000 and the difference between the standard rate ($15.00) and the actual rate ($13.50) being $1.50, we can calculate the actual hours worked as $18,000 / $1.50 = 12,000 hours.

Bear Company Uses a Standard Costing System -Refer to the Figure