Petra’s Music manufactures harmonicas. Petra uses standard costs to judge performance. Recently, a clerk mistakenly threw away some of the records, and only partial data for February exist. Petra knows that the total direct labor variance for the month was $ 330 F and that the standard labor rate was $ 10 per hour. A recent pay cut caused a favorable labor price variance of $ 0.50 per hour. The standard direct labor hours for actual February outputs were 5,600.
1. Find the actual number of direct labor hours worked during February. First, find the actual direct labor rate her hour. Then, determine the actual number of direct labor hours worked by setting up the computation of the total direct labor variance as given.
2. Compute the direct labor rate and efficiency variances. Do these variances suggest that the manager may have made trade- offs? Explain.