Calculate the company$’$s direct labor efficiency variance for the month of May. Show your calculations

$2-$Without any calculations, explain how would the company further analyze the labor efficiency variance.

 

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Maxwell Mechanical Inc. specializes in servicing central air-conditioning units. Maxwell Mechanical employs licensed HVAC technicians and apprentices. Each service call requires a combination of both types of labor. Maxwell's standard time and cost for each service call are as follows. Time 1.0 hour 3.0 hours Wage $30/hour $14/hour HVAC technician Apprentice During the month of May, Maxwell serviced 1,500 air-conditioning units. HVAC technicians worked a total of 1,900 hours with a total labor cost of $60,800. Apprentices worked a total of 4,000 hours with a total labor cost of $52,000. The service calls require a certain amount of direct materials. For the month of May, Maxwell experienced a favorable direct materials price variance of $5,000 and an unfavorable direct materials usage variance of $8,000. Maxwell Mechanical Inc. specializes in servicing central air-conditioning units. Maxwell Mechanical employs licensed HVAC technicians and apprentices. Each service call requires a combination of both types of labor. Maxwell's standard time and cost for each service call are as follows. Time 1.0 hour 3.0 hours Wage $30/hour $14/hour HVAC technician Apprentice During the month of May, Maxwell serviced 1,500 air-conditioning units. HVAC technicians worked a total of 1,900 hours with a total labor cost of $60,800. Apprentices worked a total of 4,000 hours with a total labor cost of $52,000. The service calls require a certain amount of direct materials. For the month of May, Maxwell experienced a favorable direct materials price variance of $5,000 and an unfavorable direct materials usage variance of $8,000.

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To calculate the direct labor efficiency variance we first need to determine the standard labor hours for the actual production and compare that to the actual hours worked According to the provided in... View the full answer