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17 April, 03:24

The actual cost of direct labor per hour is $14.75. Two and one half standard direct labor hours are allowed per unit of finished goods. During the current period, 3400 units were produced using 8300 direct labor hours. The direct labor efficiency variance is $3100 favorable. Calculate the standard direct labor rate per hour.

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  1. 17 April, 04:25
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    Standard Rate per hour = $15.5 per hour

    Explanation:

    given data

    actual cost = $14.75

    current period = 3400 units

    direct labor hours = 8300

    direct labor efficiency variance = $3100

    to find out

    standard direct labor rate per hour

    solution

    we use here Direct Efficiency Variance formula that is

    Direct Efficiency Variance = (Standard Hours - Actual Hours) * Standard Rate per Hour ... 1

    put here value

    3100 = [ (3400 * 2.5) - 8300 ] * Standard Rate per hour

    solve it we get

    Standard Rate per hour = $15.5 per hour
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