Direct Labor Variances
Assume that Nortel manufactures specialty electronic circuitry through a unique photoelectronic process. One of the primary products, Model ZX40, has a standard labor time of 0.5 hour and a standard labor rate of $15.50 per hour. During February, the following activities pertaining to direct labor for ZX40 were recorded:
Direct labor hours used 2,210
Direct labor cost $40,000
Units of ZX40 manufactured 4,800
(a) Determine the labor rate variance.
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(b) Determine the labor efficiency variance.
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(c) Determine the total flexible budget labor cost variance.
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