Labor Variances

Verde Company produces wheels for bicycles. During the year, 658,000 wheels were produced. The actual labor used was 355,000 hours at $9.50 per hour. Verde has the following labor standards: 1) $10.40 per hour; 2) 0.49 hour per wheel.

Required:

1. Compute the labor rate variance. $_______ Favorable

2. Compute the labor efficiency variance. $_______ Unfavorable