Caterpillar Inc. implements standard costing for its heavy machinery production. In September 2040, the following data is provided:

• Standard Labor Rate per Hour: $30
• Actual Labor Rate per Hour: $32
• Standard Hours: 10,000
• Actual Hours: 9,500

Requirements:

• Calculate the labor rate variance.
• Calculate the labor efficiency variance.
• Prepare a variance analysis report.
• Recommend strategies to improve labor efficiency.