In a certain standard costing system the following results occurred last period: labor rate variance, $1,000 U; labor efficiency variance, $2,800 F; and the actual labor rate was $0.20 more per hour than the standard labor rate. The number of actual direct labor-hours used last period was:
A) 9,000
B) 5,400
C) 5,000
D) 4,800

Question

Quizplus · Accepted Answer

Starting with the labor rate variance formula: Labor rate variance = AH (AR - SR)
We know that labor rate variance = $1,000 U and AR = SR + $0.20
Substituting these values we get: $1,000 U = AH ($0.20)
Solving for AH we get: AH = 5,000
Therefore, the number of actual direct labor-hours used last period was 5,000.

In a Certain Standard Costing System the Following Results Occurred