Labour Rate and Efficiency Variances
We answer the following,
A popular product of Loring Glassworks is a hand decorated vase. The company's standard cost system calls for 0.75 hours of direct labour per vase, at a standard wage rate of $8.25. During September, Loring Glassworks produced 4000 vases at an actual direct labour cost of $24,464 for 2,780 direct labor hours. What is the actual wage rate per hour? Compute the labor rate and efficiency variances for the month. Was paying workers the actual wage rather than the standard wage an efficient strategy for Loring?