Russell Tax Services prepares tax returns for senior citizens. The standard in terms of (direct labor) time spent on each return is 3.0 hours. The direct labor standard wage rate at the firm is $16.50 per hour. Last month, 1,470 direct labor hours were used to prepare 500 tax returns. Total wages were $26,460.
Requirements
1. What is the actual (direct labor) wage rate per hour paid last month?
2. What is the direct labor rate variance?
3. What is the direct labor efficiency variance?
4. How might the direct labor rate variance for the firm last month be causing the direct labor efficiency variance?