Northwest Medical Testing draws blood samples from approximately 2,500 clients each month. The standard time for a technician to draw and prepare a blood sample for testing is 10 minutes. The standard wage rate for technicians is $20 per hour. During August, Northwest hired a temporary employee at $30 per hour to fill in for a technician who quit unexpectedly. During the month, technicians processed 2,400 samples and were paid $11,050 for 425 hours of work related to drawing and preparing blood samples.
Required:
Calculate labor rate and efficiency variances for August, and comment on whether labor costs for technicians appear to be in control or out of control.