Work backward through labor variances (Learning Objective 4)

Amanda’s Music manufactures harmonicas. Amanda uses standard costs to judge performance. Recently, a clerk mistakenly threw away some of the records, and Amanda has only partial data for October. She knows that the direct labor flexible budget variance for the month was $330 F and that the standard labor price 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 October output were 5,600.

Requirements 1. Find the actual number of direct labor hours worked during October. First, find the actual direct labor price per hour. Then, determine the actual number of direct labor hours worked by setting up the compuation of the direct labor flexible budget variance of $330 F.
2. Compute the direct labor price and efficiency variances. Do these variances suggest that the manager may have made trade-offs? Explain.