The assembly department of United Products employs workers to assemble units of product XSD. They are paid three different wages. Senior Assemblers, who have been with the company for more than 5 years, are paid $15 per hour. Experienced Assemblers, who have been with the company between 1 and 5 years, are paid $12 per hour. Novice Assemblers, who have been with the company less than 1 year, are paid $10 per hour. Assemblers from each class can perform the assembly tasks necessary to assemble a unit of XSD but with more or less efficiency. Management expects to require 4 direct labor hours to assemble each unit of XSD.
When they developed the standard labor cost for the assembly department, management expected that 20% of the hours worked in the department would be performed by Senior Assemblers, 50% by Experienced Assemblers, and 30% by Novice Assemblers.
During March, 800 units of XSD were produced using 3,360 hours of assembly labor. Because of an unforeseen expansion in the demand for XSD, this was many more hours than expected. Therefore, Senior Assemblers worked 15% of the labor hours, Experienced Assemblers worked 45%, and Novice Assemblers worked 40%.
Required
1. Determine the standard assembly labor cost per hour.
2. Determine the actual assembly labor cost per hour during March.
3. Compute the direct labor rate and efficiency variances for March. Don't forget to indicate whether those variances are unfavorable or favorable.
4. Based on the information given in this problem, what action, if any, would you expect management to take in response to the labor variances that you computed in part (3)?