Chapter 9, Problem 1MAD

Advent Software uses standards to manage the cost of the programming staff. There are two programmer levels, Level 1 and Level 2. Level 1 programmers normally work on the easier projects. Level 1 and Level 2 programmers are paid $25 and $35 per hour, respectively. It has been determined from experience that Level 2 programmers can complete 50 lines of code per hour. If a Level 1 programmer is assigned to a Level 2 task, the programming work will be slower than the Level 2 time standard, but will be accomplished at a lower labor rate.

During a recent week, a Level 2 project was assigned to a Level 1 programmer. The programmer worked 40 hours and completed 1,400 lines of code.

1. a. Determine the direct labor time variance for this worker.
2. b. Determine the direct labor rate variance for this worker.
3. c. Using the information in (a) and (b), is it more cost effective to use a Level 1 worker or a Level 2 worker on a Level 2 project?