Labor Variances. The payroll for Medical Claims Processors for the year was \(\$ 516,000\). Income taxes of \(\$ 105,000\) and FICA taxes of \(\$ 42,000\) were withheld, and employee voluntary withholdings totaled \(\$ 4,000\). The net amount paid to employees was \(\$ 365,000\). Included in the total payroll was indirect labor of \(\$ 141,000\) (not on an hourly basis).

The standard labor rate of \(\$ 5.00\) per hour was paid for 60,000 hours, and \(\$ 7.50\) per hour was paid for 10,000 hours. The company processed 550,000 claims during the year. Standards show that eight claims should be processed each hour.

\section*{Required:}

1. Calculate the labor rate variance.

2. Calculate the labor efficiency variance.

3. Using T-accounts, show what direct labor cost was charged to Work in Process Inventory, to the various payroll-related accounts, and to the appropriate variance accounts