Company is struggling to control labor costs. In the most recent period closed, actual labor varied from forecasted labor by $22,513 (unfavorable). The president has asked the Finance Department to analyze and report on the causes of the variance

Budget Actual

Man hours 10,350 11,225

Labor Cost $175,750 $198,263

A) Compute Price and Efficency variances.

B)Relating to the information above, in the absence of any further information, what might you look at to explain the variances: discuss two possible reasons for the unfavorable price variance and two logical reasons that could explain the efficiency variance.