(Direct labor variances) The accounting firm of Reid and Associates set the following standard for its inventory audit of DelRio Co.: 300 hours at an av¬ erage billing rate of $145. The firm actually worked 270 hours during the in¬ ventory audit process. The total labor variance for the audit was $500 unfavorable.

a. Compute the total actual payroll. Record the entry to accrue payroll costs.

b. Compute the labor efficiency variance.

c. Compute the labor rate variance.

d. Write a memo to the appropriate personnel regarding feedback about the labor efficiency variance. The memo should also offer a brief expla¬ nation that is consistent with the labor rate and efficiency variances.

LO.1