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Standards for one unit of product: Direct Materials: 5 pounds at $2 per pound Direct Labor:...

Standards for one unit of product:

Direct Materials: 5 pounds at $2 per pound

Direct Labor: 0.50 hour at $16 per hour

Materials and Labor Used to produce 8,500 units:

Direct Materials: 46,000 pounds at $3 per pound

Direct Labor: 4,000 hours at ? per hour

If the Direct Labor Price Variance is $4,600 Unfavorable, what is the actual labor rate per hour?

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Answer #1
Direct Labor Price Variance = (Standard Rate - Actual Rate)*Actual Labor hours
$   -4,600 = (16.00-Actual Labor rate)*4000
$     -1.15 = 16.00-Actual Labor rate
Actual Labor rate = $    17.15
Thus,
Actual labor rate is $    17.15 per hour
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