Chapter 11, Problem 11.6SE

Calculate direct labor variances (Learning Objective 3)

Edelman Oil performs oil changes. The standard wage rate for oil change technicians is $17 per hour. By analyzing its past records of time spent on oil changes, the company has developed a standard of 18 minutes (or 0.30 hours) per oil change.

In July, 1,600 oil changes were performed at Edelman Oil. Oil change technicians worked a total of 310 direct labor hours at an average rate of $24 per hour.

Requirements

1. 1. Calculate the direct labor rate variance.
2. 2. Calculate the direct labor efficiency variance.