Problem
PCP & Co. are a growing organization. Their standard direct labour hours per unit is 3, and the labour rate is $11 per hour. During August 2021, PCP produced 4,200 units consisting of 4,000 units consisting of 4,000 good units and 200 defective units. PCOP used 13,000 direct labour hours at a cost of $140,400.
1. Calculate the labor efficiency variance assuming that PCP does not calculate a quality variance.
2. Calculate the quality variance and the labour efficiency variance assuming PCP does calculate a separate quality variance.