Problem
The standard labor cost in the production of a pair of Tarjee Brand athletic shoes is 0.40 hours at $13.00 per hour. During the month of June, 23,420 pairs were produced. Actual labor costs were $104,390 for 8,030 hours. Compute the labor rate and labor efficiency variances for the month of June.
i. What is the labor rate variance and is it favorable, unfavorable, or neither?
ii. What is the labor efficiency variance and is it favorable, unfavorable, or neither?