Question:
Harvey Inc. uses a standard cost system for labor. Standard costs for material cannot be used because customers require unique materials and all jobs are different sizes. One of the company's jobs experienced the following results related to direct labor in December 2010:
Actual hours worked ..............................9,000
Standard hours for production ...................8,600
Actual direct labor rate ...........................$9.65
Standard direct labor rate ........................$9.85
a. Calculate the total actual payroll.
b. Determine the labor rate variance.
c. Determine the labor quantity variance.
d. What concerns do you have about the variances in (b) and (c)?