Mandy Company has the following information from last month:$\begin{array}{lr}
\text { Standard direct labor hours allowed for units produced (SQ) } & 3,600 \
\text { Actual direct labor hours worked (AQ) } & 3,480 \
\text { Direct labor efficiency variance, favorable (F) } & \$ 5,760 \
\text { Total payroll } & \$ 187,920
\end{array}$What was Mandy's standard direct labor rate per hour (SP), rounded to two decimal places?
A) $43.20.
B) $45.60.
C) $48.00.
D) $52.20.

Question

Quizplus · Accepted Answer

The direct labor efficiency variance formula is: $ \text{Direct Labor Efficiency Variance} = (SQ - AQ) \times SP $. Given that the variance is favorable ($5,760) and the actual hours worked (AQ) are less than the standard hours (SQ), we can rearrange the formula to solve for SP (Standard Price or rate per hour): $ SP = \frac{\text{Direct Labor Efficiency Variance}}{SQ - AQ} $. Plugging in the given numbers: $ SP = \frac{5760}{3600 - 3480} = \frac{5760}{120} = 48 $. Therefore, the standard direct labor rate per hour is $48.00.

Mandy Company Has the Following Information from Last Month What Was Mandy's Standard Direct Labor Rate Per Hour (SP)