Montana Company uses a standard costing system. The following information pertains to direct labor costs for the month of February: $$\begin{array} { l l }
\text { Standard direct labor rate per hour } & \$ 15.00 \
\text { Actual direct labor rate per hour } & \$ 13.50 \
\text { Labor rate variance } & \$ 18,000 \text { favorable } \
\text { Actual output } & 1,000 \text { units } \
\text { Standard hours all owed for actual production } & 10,000 \text { hours }
\end{array}$$ How many actual labor hours were worked during February for Montana Company?
A)10,000
B)12,000
C)1,200
D)2,000

Question

Montana Company uses a standard costing system. The following information pertains to direct labor costs for the month of February: $$\begin{array} { l l } 
\text { Standard direct labor rate per hour } & \$ 15.00 \
\text { Actual direct labor rate per hour } & \$ 13.50 \
\text { Labor rate variance } & \$ 18,000 \text { favorable } \
\text { Actual output } & 1,000 \text { units } \
\text { Standard hours all owed for actual production } & 10,000 \text { hours }
\end{array}$$ How many actual labor hours were worked during February for Montana Company?
A)10,000
B)12,000
C)1,200
D)2,000

Quizplus · Accepted Answer

The labor rate variance is calculated as (Standard Rate - Actual Rate) * Actual Hours Worked. Given a favorable variance of $18,000 and the rates provided, we can set up the equation: ($15.00 - $13.50) * Actual Hours = $18,000. Solving for Actual Hours gives us 12,000 hours.

Montana Company Uses a Standard Costing System How Many Actual Labor Hours Were Worked During February for Pertains