Republic, Inc. has gathered the following data in preparing to record their dire

Question

Republic, Inc. has gathered the following data in preparing to record their direct labor payroll costs for the week: Actual hours worked        18,500 Standard hours allowed        20,000 Total direct labor variance $      8,300 F Direct labor price variance $      3,700 U Required: Calculate (a) The standard direct labor price (b) The actual direct labor costs ( c) The actual direct labor price Republic, Inc. has gathered the following data in preparing to record their direct labor payroll costs for the week: Actual hours worked        18,500 Standard hours allowed        20,000 Total direct labor variance $      8,300 F Direct labor price variance $      3,700 U Required: Calculate (a) The standard direct labor price (b) The actual direct labor costs ( c) The actual direct labor price

Explanation / Answer

Answer:

Standard direct labor price = SP

Actual direct labor price = AP

Actual hours worked = AH = 18,500

Standard hours allowed = SH = 20,000

Now Direct labor price variance = AH (SP- AP)

-3700 = 18500 (SP-AP)

or SP-AP = -3700/ 18500

or SP-AP = -.20

or AP-SP = .20

or AP = SP+.20

Now Total direct labor Variance = SP*SH - AP*AH

8300 = SP* 20,000 - (SP+.20)*18500

8300 = 20000SP - 18500SP - 3700

SP = 12000/1500

SP = $8

AP = $8 + .2

AP = $8.2

Actual direct labor costs = AP * AH = 8.2 * 18500 = $151,700

(a) The standard direct labor price = $8

(b) The actual direct labor costs = $151,700

( c) The actual direct labor price = $8.20

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