The standard cost of direct labor per hour is $10.00.Two standard direct labor hours are allowed per finished good.During the current period,512 finished goods were produced using 1,000 direct labor hours.The direct labor price variance is $100,unfavorable.Calculate the actual cost of direct labor per hour.

Question

Quizplus · Accepted Answer

The formula for direct labor price variance is:
(Direct Labor Actual Rate - Direct Labor Standard Rate) x Actual Direct Labor Hours

We know the direct labor price variance is $100 unfavorable, which means that the actual rate was higher than the standard rate. Therefore:

($10.00 - Actual Direct Labor Rate) x 1,000 = $100
Actual Direct Labor Rate = $10.10

Since two standard direct labor hours are allowed per finished good, the actual cost of direct labor per hour can be calculated as:

Actual Cost of Direct Labor per Hour = Actual Direct Labor Cost / Actual Direct Labor Hours
Actual Cost of Direct Labor per Hour = ($10.10 x 1,000) / 1,000
Actual Cost of Direct Labor per Hour = $10.10

Therefore, the best choice is C, $10.10.

The Standard Cost of Direct Labor Per Hour Is $10