The actual cost of direct labor per hour is $14.75.Two and one half standard direct labor hours are allowed per unit of finished goods.During the current period,2,700 units were produced using 6,500 direct labor hours.The direct labor efficiency variance is $2,500 favorable.Calculate the standard direct labor rate per hour.

Question

Quizplus · Accepted Answer

B)
Labor efficiency variance = (Actual hours - Standard hours for act units)× Standard Price (SP)
$2,500 = (6,500 - (2,700 × 2.5))× Standard rate
Standard rate = $2,500 / 250 = $10.00

The Actual Cost of Direct Labor Per Hour Is $14