2. At the beginning of the month, a supplier of a component used in our product notified us that, because of a minor design improvement, the price will be increased by 10% above the current standard price of $125 per unit. As a result of the improved design, we expect the number of defective components to decrease by 110 units per month. On average, 2,640 units of the component are purchased each month. Defective units are identified prior to use and are not returnable. Effect on materials price variance $ 0 u Effect on materials quantity variance $ 0 3. In an effort to meet a deadline on a rush order in Department A, the plant manager reassigned several higher-skilled workers from Department B, for a total of 792 labor hours. The average salary of the Department B workers was $2.15 more than the standard $11.00 per hour rate of the Department A workers. Since they were not accustomed to the work, the average Department B worker was able to produce only 24 units per hour instead of the standard 36 units per hour. (Consider only the effect on Department A labor variances.) Effect on labor rate variance $ 0 1702. 8 u 792 x ( 11. 00 - 1 3 . 1 5 ) = 1702.8 or 1703 ? 15 94 Effect on labor efficiency variance $ 0 u ( 792 . 36 ) (792. 24 ) 28512 - 19008 .11 = 104 544 4. Robbie Wallace is an inspector who earns a base salary of $4,400 per month plus a piece rate of 40 cents per bundle inspected. His company accounts for inspection costs as manufacturing overhead. Because of a payroll department error in June, Robbie was paid $3,300 plus a piece rate of 60 cents per bundle. He received gross wages totaling $4,620. Hint: Robbie's compensation has both paid $3,300 plus a piece rate of 60 cents per bundle. He received gross wages totaling $4,620. Hint: Robbie's compensation has both fixed and variable components. Effect on variable overhead spending variance $ 0 u Effect on fixed overhead budget variance $ 0