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

Homework Answers

Answer #1
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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