During January, 7,175 direct labor hours were worked at a standard cost of $20 per hour. If the direct labor rate variance for January was $17,500 favorable, the actual cost per direct labor hour must be
A)$20.50.
B)$25.50.
C)$23.00.
D)$17.56.

Question

Quizplus · Accepted Answer

The direct labor rate variance is calculated as (Actual Rate - Standard Rate) x Actual Hours. Given a favorable variance of $17,500 and standard cost of $20 per hour for 7,175 hours, we can set up the equation: (Actual Rate - $20) x 7,175 = -$17,500 (favorable variance means actual cost was less). Solving for the Actual Rate gives us $17.56 per hour.

During January, 7,175 Direct Labor Hours Were Worked at a Standard