Refer to the information in Problem.

In Problem, Davenport Construction Associates compares actual results with a flexible budget. The standard direct labor rates used in the flexible budget are established each year at the time the annual plan is formulated and held constant for the entire year.

The standard direct labor rates in effect for the current fiscal year and the standard hours allowed for the actual output of remodeling work for September are shown in the following schedule:

The wage rates for each labor class increased under the terms of a new contract. The standard wage rates were not revised to reflect the new contract. The actual direct labor-hours worked and the actual direct labor rates per hour experienced for the month of September were as follows:

Required

Write a memo to the managers at Davenport Construction Associates recommending which variances they should investigate this period along with your reasons.

Standard Direct Labor-Hours Rate per Hour Allowed for Output 2,000 Standard Direct Labor Worker Classification 1.... II $48 42 2,000 2,000 II 30