Standard Labor Variance for CPA firm audit
A CPA firm estimates that an audit will require the following work:
Type of Auditor Expected Hours Cost per hour Standard Costs
Manager 10 $50 $500
Senior 20 40 800
Staff 40 30 1200
Totals 70 $2500
The actual hours and costs were:
Type of Auditor Actual Hours Actual Cost per hour Actual Costs
Manager 9 $52 $468
Senior 22 38 836
Staff 44 30 1320
Totals 75 $2624
Required:
Calculate the direct labor, wage rate, and labor efficiency variances for each type of auditor and interpret.