Last week, 2,250 direct labor hours were worked at a total fabor per direct lebser hour To known. Start with SH * SR Holding SR constant, change SH to AH to comptute Efficiency variance (Only because f use more/less labor in production) Holding AH constant, change SR to AR to comptute Rate variance (Only because I pay the workers at a hisher/lower salary rate) Manufacturing Overhead Variances (not in exam) To knowie Advantages of Standard Costs A key element of the management by exception approach. 1550 v. 1500 hours are used to make the 1,000 tipples Standards can provide benchmarks that promote economy and efficiency Standard cost variance reports are usually prepared on a monthly basis and may contain Standards can support responsibility accounting systems. information that is outdated. Labor variances assame that the production process is labor-pacedland that labor is a variable cost. These assumptions are often invalid in todwy's automated manufacturing crviconment where employeeslare essentially a fixed cost