Master Auto Parts has a standard labor rate of $10.50 per hour.In September, the company produced 10,000 gears using 24,000 labor hours.The company experienced a favorable labor rate variance of $18,000 during September.How much is Master Auto Parts' actual labor rate per hour?
A)$9.75
B)$11.25
C)$13.50
D)$7.50

Question

Quizplus · Accepted Answer

The labor rate variance is calculated as (Actual Labor Rate - Standard Labor Rate) x Actual Hours Worked. Given a favorable variance of $18,000 and actual hours of 24,000, we can set up the equation: ($10.50 - Actual Labor Rate) x 24,000 = -$18,000. Solving for the Actual Labor Rate gives us $9.75 per hour.

Master Auto Parts Has a Standard Labor Rate of $10