During October, 16,000 direct labour hours were worked at a standard cost of £6 per hour. If the labour rate variance for October was £4,000 unfavorable, the actual cost per labour hour must be
A) £6.25
B) £6.00
C) £5.75
D) none of the above

Question

Quizplus · Accepted Answer

The labour rate variance formula is (Actual Hourly Rate - Standard Hourly Rate) x Actual Hours Worked. Given an unfavorable variance of £4,000 and 16,000 hours worked, we can set up the equation: (£X - £6) x 16,000 = -£4,000 (unfavorable variance is negative). Solving for X gives us £6.25 as the actual cost per labour hour.

During October, 16,000 Direct Labour Hours Were Worked at a Standard