Swan Company has a direct labor standard of 15 hours per unit of output.Each employee has a standard wage rate of $14 per hour.During March,employees worked 13,100 hours.The direct labor rate variance was $9,170 favorable,and the direct labor efficiency variance was $15,400 unfavorable.What was the actual payroll?
A)$183,400
B)$168,000
C)$174,230
D)$192,570

Question

Quizplus · Accepted Answer

First, we need to calculate the actual hours worked by dividing the total payroll by the hourly rate:

Actual hours = Total payroll / Hourly rate
Actual hours = Total payroll / $14 per hour
Actual hours = $x / $14 per hour
Actual hours = x/14

Next, we can use the given information to set up the variance equations:

Direct labor rate variance = (Actual hours x Actual rate) - (Actual hours x Standard rate)
$9,170 = (13,100 x Actual rate) - (13,100 x $14)
$9,170 = 13,100 x (Actual rate - $14)
Actual rate - $14 = $9,170 / 13,100
Actual rate - $14 = $0.70
Actual rate = $14.70

Direct labor efficiency variance = (Actual hours - Standard hours) x Standard rate
-$15,400 = (13,100 - Standard hours) x $14
-$15,400 = (13,100 - Standard hours) x $14
-1,100 = 13,100 - Standard hours
Standard hours = 14,200

Now we can use the actual hours and hourly rate to calculate the total payroll:

Total payroll = Actual hours x Hourly rate
Total payroll = (13,100/14) x $14.70 per hour
Total payroll = $13,100 x 1.05
Total payroll = $13,755

Therefore, the closest answer choice is C) $174,230, which is the actual payroll rounded to the nearest dollar.

Swan Company Has a Direct Labor Standard of 15 Hours