Cornell Company had the following information available for its specialty product:
Standards for one unit of product:
Direct Materials: 5 pounds at $2 per pound
Direct Labor: 0.50 hour at $16 per hour
Materials and Labor Used to produce 8,500 units:
Direct Materials: 46,000 pounds at $3 per pound
Direct Labor: 4,000 hours at ? per hour
If the Direct Labor Price Variance is $4,600 Unfavorable,what is the actual labor rate per hour?
A) $16.00
B) $16.50
C) $17.10
D) $17.15

Question

Quizplus · Accepted Answer

The Direct Labor Price Variance (DLPV) is calculated as (Actual Rate - Standard Rate) * Actual Hours. Given that the DLPV is $4,600 Unfavorable and the standard rate is $16 per hour, we can set up the equation: ($AR - $16) * 4,000 hours = $4,600, where $AR is the actual rate. Solving for $AR gives us $17.15 per hour.

Cornell Company Had the Following Information Available for Its Specialty