A nationally known blue jeans manufacturer purchases denim material and cuts it into a vaobjs. 1,2 riety of components and sizes. Following the machine-intensive cutting operation, the parts are flown to another location for assembly. The following data summarize the assembly operations:

Calculate the labor rate variance and the labor efficiency variance. Determine whether each variance is favorable or unfavorable. How might managers use variance information such as this to support decisions about changing a manufacturing process?

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Standard hours allowed per pair 0.30 Actual hours worked Standard wage rate per hour $7.00 Actual labor rate per hour 4,500 $6.50 Actual pairs assembled 16,000