The Ranger Company produces Ringos. The president of the company has recently been puzzled by apparent problems causing direct labor price variances that she cannot identify. You are asked to help the president understand the source of the direct labor price variances. The president informs you that 7 direct labor hours should be worked to produce each Ringo and that the standard direct labor cost totals $84 per Ringo. During April, 700 Ringos were produced, 4,900 direct labor hours were worked, and direct labor cost incurred was $59,374.

Required: (1) Given the preceding information, compute the direct labor price and efficiency variances.

(2) Suppose on further investigation you discover that 990 of the 4,900 direct labor hours were worked in Ranger’s Department A and the rest in Department B. Furthermore you discover that production of each Ringo should require the following:

Department A : 2 direct labor hours @ $11.00 per hour = $22.00 Department B:5 direct labor hours @ $12.40 per hour = 62.00 Total direct labor cost per Ringo $84.00 You also discover that during April, $10,890 of the direct labor cost was incurred in Department A and $48,484 in Department B. Given this addi- tional information, compute the direct labor price and efficiency variances for Department A and Department B separately.
(3) Comment on the results obtained in (1) and (2).

 TKY-1