Prince Inc.has the following information:
$$\begin{array} { | l | r | l | }
\hline \text { Total payroll } & \$ 165,300 & \
\hline \text { Standard direct labor hours } & 45,000 & \
\hline \text { Labor rate variance } & \$ 8,700 & \mathrm {~F} \
\hline \text { Labor mix variance } & \$ 4,000 & \mathrm {~F} \
\hline \text { Labor yield variance } & \$ 2,000 & \mathrm {~F} \
\hline
\end{array}$$What was the standard direct labor rate?
A) $3.50.
B) $3.80.
C) $4.00.
D) $5.80.

Question

Prince Inc.has the following information: 
$$\begin{array} { | l | r | l | } 
\hline \text { Total payroll } & \$ 165,300 & \
\hline \text { Standard direct labor hours } & 45,000 & \
\hline \text { Labor rate variance } & \$ 8,700 & \mathrm {~F} \
\hline \text { Labor mix variance } & \$ 4,000 & \mathrm {~F} \
\hline \text { Labor yield variance } & \$ 2,000 & \mathrm {~F} \
\hline
\end{array}$$What was the standard direct labor rate?
A) $3.50.
B) $3.80.
C) $4.00.
D) $5.80.

Quizplus · Accepted Answer

The labor rate variance is calculated as (Actual Rate - Standard Rate) x Actual Hours. Given the labor rate variance is $8,700 F (favorable), it implies the actual rate was less than the standard rate. The total payroll divided by standard hours gives the standard rate: $165,300 / 45,000 hours = $3.67. Adjusting for the favorable variance, the standard rate is $4.00.

Prince Inc What Was the Standard Direct Labor Rate? A) $3

Prince Inc What Was the Standard Direct Labor Rate?
A) $3