The following labor standards have been provided by the Rand Company:
Standard hours per unit: 2
Standard cost per hour: $12
During the most recent month Rand produced 3,000 units while reporting an unfavorable labor price variance of $1,160. What was the total actual labor cost assuming that 5,800 labor hours were
Actually incurred?

Question

Quizplus · Accepted Answer

The total actual labor cost can be calculated by first determining the standard cost for the actual hours worked and then adjusting it by the unfavorable variance. The standard cost for the actual hours (5,800 hours) is 5,800 hours * $12/hour = $69,600. Since there was an unfavorable labor price variance of $1,160, this means the actual cost was higher than the standard cost by $1,160. Therefore, the total actual labor cost is $69,600 + $1,160 = $70,760.

The Following Labor Standards Have Been Provided by the Rand