Question: After evaluating Pima Companys manufacturing process, management decides to establish standards of 1.4 hours of direct labor per unit of product and $15 per hour

After evaluating Pima Company’s manufacturing process, management decides to establish standards of 1.4 hours of direct labor per unit of product and $15 per hour for the labor rate. During October, the company uses 3,720 hours of direct labor at a $40,920 total cost to produce 4,000 units of product. In November, the company uses 4,560 hours of direct labor at a $54,720 total cost to produce 3,500 units of product.

(1) Compute the rate variance, the efficiency variance, and the total direct labor cost variance for each of these two months.

(2) Interpret the October direct labor variances.

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Alternate solution format Rate variance AH x AR SR 3720 hours x 11 15 per hour 3720 hours x 4 per hour 14880 F Efficiency variance AH SH x SR 3720 560... View full answer

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