Problem
Measuring the effects of decisions on standard cost variances (comprehensive)
1. In an effort to meet a deadline on a rush order in Department A, the plant manager reassigned several higher-skilled workers from department B, for a total of 300 labor hours. The average salary of Department B workers is $2.05 more than the standard $7.25 per hour rate of the Department A workers. Since they were not accustomed to the work, the average Department B worker was able to produce only 36 units per hour instead of the standard 48 units per hour. (Consider on the effect on Department A labor variances.)
Required
For each of the preceding situations, determine which standard cost variance(s) will be affected, and compute the amount of the effect for one month on each variance. Indicate whether the effect is favorable or unfavorable. Assume that the standards are not changed in response to these situations.