Question

Your Corporation's direct labor costs for the month were as follows:
           

	Total standard direct labor-hours..............	42,000
	Total actual direct labor-hours..................	40,000
	Direct labor rate variance..........................	$8,400	Favorable
	Standard direct labor rate per hour............	$6.30

  
            What was the total direct labor payroll (AP) for the month?

Answer 1

Given,

Standard direct labor rate per hour = $6.30

Actual direct labor-hours = 40,000 hours

Direct labour rate variance = $8,400 F

Lets incorporate these values into the following equation to determine actual direct labou rate per hour:

Direct Labour Rate Variance = (Actual direct labou rate per hour- Standard direct labor rate per hour) x Actual direct labor-hours

$8,400 = (Actual direct labou rate per hour - $6.30) x 40,000 hours

Actual direct labou rate per hour = $6.09 per hour

Total direct labor payroll (AP) for the month = Actual direct labou rate per hour x Actual direct labor-hours = $6.09 per hour x 40,000 hours = $243,600