Problem:
China Inc. produces custom-painted cake plates for a number of major department stores. During the most recent week, the company prepared 6,000 platesusing 1,150 direct labor-hours. The company paid its direct labor workers at an average pay rate of $10.00 per hour. According to the standard cost card, each plate should require .20 direct-hours at a cost of $9.50 per hour.
Required: Compute the labor efficiency variance and a labor rate variance.