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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