Ellerbee Cable Company uses a standard costing system to control the labor costs associated with cable installation and repair. Ellerbee uses the following rule to determine whether the labor efficiency variance should be investigated: a labor efficiency variance will be investigated when the amount exceeds the lesser of $2,100 or 5% of standard cost. The company collected reports for the past four months to pro- vide the following information:
Month
|
LEV
|
Standard Labor Cost
|
|
1
|
$2,280 F
|
$45,000
|
|
2
|
2,000 U
|
50,000
|
|
3
|
1,900 F
|
48,000
|
|
4
|
3,050 U
|
60,000
|
Required
1. Using the rule provided, identify the cases that will be investigated.
2. Suppose investigation reveals that the cause of an unfavorable labor efficiency variance is the hiring of a number of new workers who worked more slowly while they were being trained. Who is responsible? What corrective action would likely be taken?