Question

Month Labor Cost Employee Hours January 14,000 720 February 16,280 1,100 March 19,798 1,260 April 19,574...

Month Labor Cost Employee Hours January 14,000 720 February 16,280 1,100 March 19,798 1,260 April 19,574 1,220 May 16,980 960 June 14,900 700 July 18,980 740 August 15,062 620 What is the variable rate per employee labor hour?

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Answer #1

Variable cost per employee labor hour = (Highest activity cost – Lowest activity cost)/(Highest activity employee labor hour – Lowest activity employee labor hour)

= (19,798 - 15,062)/(1,260 - 620)

= 4,736/640

= $7.4

the variable rate per employee labor hour = $7.4

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