Question

For the month of August, M Company’s records disclosed the following data relating to direct labor:

Actual direct labor cost P10,000
Rate variance 1,000 F
Efficiency variance 1,500 U
Standard direct labor cost P9,500

For the month of August, M used 2,000 direct labor hours. The company’s standard direct labor rate per hour is:

Answer 1

The company's standard direct labor rate per hour is calculated by dividing the standard direct labor cost (P9,500) by the actual direct labor hours (2,000 hours), resulting in P4.75 per hour.

Step-by-step explanation:

You want to calculate the standard direct labor rate per hour for M Company, given the standard direct labor cost and the actual direct labor hours used. To find the rate, divide the standard direct labor cost by the actual direct labor hours.

The formula for the standard direct labor rate per hour is:

• Standard Direct Labor Rate = Standard Direct Labor Cost / Actual Direct Labor Hours

Based on the data:

• Standard Direct Labor Cost = P9,500
• Actual Direct Labor Hours = 2,000 hours

Therefore, the calculation is:

Standard Direct Labor Rate = P9,500 / 2,000 hours = P4.75 per hour

Answer 2

The standard direct labor rate per hour for M Company is P4.75, calculated by dividing the standard direct labor cost of P9,500 by the standard direct labor hours, which is 2,000 hours.

Step-by-step explanation:

To find the standard direct labor rate per hour for M Company, we can look at the information provided. The company has an actual direct labor cost of P10,000 and a rate variance that is 1,000 F (favorable). This indicates that the standard cost was lower than the actual cost by P1,000. With an efficiency variance of 1,500 U (unfavorable), this means that the actual labor hours used were less efficient than the standard labor hours estimated, increasing the standard direct labor cost to P9,500. Given that M used 2,000 direct labor hours, we can calculate the standard rate.

The formula to calculate the standard direct labor rate per hour is:

Standard Direct Labor Rate = Standard Direct Labor Cost / Standard Direct Labor Hours

Standard Direct Labor Rate = P9,500 / 2,000 hours

Standard Direct Labor Rate = P4.75 per hour.