Question - Charity Quilt Company produces and sells custom quilts. The company has a standard cost system to help control costs and has established the following labor standards for completing quilt tops.
Standard labor-hours per unit of output: 5.4 hours
Standard labor rate: $10.20 per hour
The following data pertain to quilt top operations for the last month.
Actual hours worked: 1,000 hours
Actual labor cost: $10,600
Actual output: 200 units
Required -
Compute the following variances
Direct labor rate and efficiency variances.
Prepare a brief explanation of the possible causes of each variance.