Dem Mfg. has gathered the following data in preparing to record their direct labour payroll costs for the week: Actual hours worked 18,500
Standard hours allowed 20,000
Total direct labour variance $8,300 F
Direct labour price variance $3,700 U
The actual direct labour price was:
A)$8.00
B)$8.20
C)$9.10
D)$7.80

Question

Quizplus · Accepted Answer

Direct labour rate variance = (actual rate - standard rate) x actual hours

Direct labour price variance = (actual rate - standard rate) x actual hours

Direct labour rate variance = Direct labour variance - Direct labour price variance

Therefore:

Direct labour rate variance = $8,300 - $3,700 = $4,600 F

And,

Direct labour rate variance = (actual rate - standard rate) x actual hours
$4,600 F = (actual rate - $8.00) x 18,500
Actual rate = $8.20

Dem Mfg Has Gathered the Following Data in Preparing to Record