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Actual direct labour is 5,100 hours at $9.50 per hour against a standard of 5,000 hours at $10.00. What is the total actual direct labour cost?
A$50,000
B$51,000
C$47,500
D$48,450
Answer & Solution
Correct answer: D. $48,450
1. Total actual cost is actual hours multiplied by the actual rate.
2. 5,100 hours times $9.50 gives $48,450.
3. Standard cost for comparison is 5,000 hours times $10.00, which is $50,000.
4. Actual cost is $1,550 lower than standard, so the total direct labour cost variance is favourable.
5. $51,000 costs the actual hours at the standard rate, which is a mid step rather than the actual cost.
_Source: Jonick, Principles of Managerial Accounting (UNG Press, CC BY-SA 4.0), section 8.3 Direct Labor Cost Variance_
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