The actual cost of direct labor per hour is $12.50. Three standard direct labor hours are allowed per finished good. During the current period, 800 finished goods were produced using 2,500 direct labor hours. The direct labor efficiency variance is $1,300, unfavorable. What was the standard labor rate per hour?
A) $13.00
B) $12.75
C) $13.50
D) $12.00

Question

Quizplus · Accepted Answer

The standard labor rate per hour is calculated by dividing the actual cost of direct labor per hour by the standard direct labor hours allowed per finished good. In this case, the actual cost of direct labor per hour is $12.50 and the standard direct labor hours allowed per finished good are 3 hours. Therefore, the standard labor rate per hour is $12.50 / 3 hours = $13.00.

The Actual Cost of Direct Labor Per Hour Is $12