Question

The standard number of hours that should have been worked for the output attained is 2000 direct labor hours and the actual number of direct labor hours worked was 2300. if the direct labor price variance was $1150 unfavorable, and the standard rate of pay was $7 per direct labor hour, what was the actual rate of pay for direct labor?

Answer 1

Since we know the actual hours worked were 2300 and the direct labor was $1150 unfavorable ..or more than what a business expect. We take the price variance $1150 divided by the actual hours worked of 2300 this would tell how much more the business paid per hour over the standard rate. Which when we do that it comes out $.50 more than then the standard rate of $7. So in total they paid $7.50 per hour