Assume Martin Guitar Company has a standard of 3 hours of direct labor per unit produced and $20 per hour for the labor rate. During last period, the company used 24,000 hours of direct labor at a $456,000 total cost to produce 6,000 units. Compute the direct labor rate and efficiency variances.
Rate Variance: $120,000 unfavorable; Efficiency Variance: $24,000 unfavorable.
Rate Variance: $24,000 favorable; Efficiency Variance: $120,000 unfavorable.
Rate Variance: $24,000 unfavorable; Efficiency Variance: $120,000 favorable.
Rate Variance: $120,000 favorable; Efficiency Variance: $24,000 unfavorable.
Rate Variance: $96,000 favorable; Efficiency Variance: $96,000 unfavorable.