Dynamo Industrial Inc. specializes in servicing central air conditioning units. Maxwell Mechanical employs licensed Electrician technicians and apprentices. Each service call requires a combination of both types of labor.

Dynamo's standard time and cost for each service call are as follows.

Time

Wage

Electrician technician

1.0 hour

$30/hour

Apprentice

3.0 hours

$14/hour

During the month of June, Dynamo serviced 1,500 Generator and Electrical panel units. Electrical technicians worked a total of 1,900 hours with a total labor cost of $60,800.

Apprentices worked a total of 4,000 hours with a total labor cost of $52,000. The service calls require a certain amount of direct materials. For the month of June, Dynamo experienced a favorable direct materials price variance of $5,000 and an unfavorable direct materials usage variance of $8,000.

Explain how Dynamo could use management by exception.

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Calculate Dynamo's total direct labor rate variance for the month of June. Show your calculations.

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Calculate Dynamo's total direct labor efficiency variance for the month of June. Show your calculations.

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Identify one possible cause and one corrective action for the combination of a favorable direct materials price variance and an unfavorable direct materials usage variance experienced by Dynamo in June.

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