Sheldon Company manufactures only one product and uses a standard cost system.During the past month,the manufacturing operations had the following variances: Direct labor rate variance = $30,000 Favorable;direct labor efficiency variance = $50,000 Unfavorable.Sheldon allows 5 standard direct labor hours per unit produced,and its standard direct labor hourly rate is $50.During the month,the company used 25 percent more direct labor hours than the standard allowed.What was the actual hourly rate for direct labor?
A)$30.
B)$36.
C)$44.
D)$50.
E)$56.

Question

Quizplus · Accepted Answer

Direct labor rate variance = ($50 - actual hourly rate) x actual direct labor hours
$30,000 = ($50 - actual hourly rate) x actual direct labor hours
Actual direct labor hours = (5 hours per unit produced) x (1.25 units produced) = 6.25 hours per unit produced 
$30,000 = ($50 - actual hourly rate) x 6.25 hours per unit produced 
$4,800 = $50 - actual hourly rate 
Actual hourly rate = $50 - $4,800 = $45.2 ≈ $44. Therefore, the best choice is C.

Sheldon Company Manufactures Only One Product and Uses a Standard