Question

# The Wright Company has a standard costing system. The following data are available for September: Actual...

The Wright Company has a standard costing system. The following data are available for September:

 Actual quantity of direct labor hours.................................................................................... 20,000 hours Standard price of direct labor.................................................................................... \$5 per hour Total labor variance ……………………………………. \$7,000, favorable Labor efficiency variance.................................................................................... \$9,000, unfavorable

The actual price (rate) per hour of direct labor is:

 A. \$5.10 B. \$4.90 C. \$4.20 D. \$6.20 E. \$5.80

 Labour Efficiency Variance Actual Hours*Standard Rate- Standard Hours* Standard Rate \$9,000 = 20000*5-SH*5 5*Standard Hours = 100000-9000 5*Standard Hours = 91000 Standard Hours 91000/5 18200 Hours Total Labour Variance Standard Rate*Standard Hours- Actual Rate*Actual Hours \$7,000 = 5*18200- AR*20000 20000*Actual Rate = \$91000-\$7000 20000*Actual Rate = \$84,000 Actual Rate = \$84000/20000 Actual Rate = \$4.20 per hours The Correct answer is C. \$4.20

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