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Leeds company uses the following rule to determine whether labor efficiency variances should be investigated. A labor efficiency variance will be investigated when the variancee
Leeds company uses the following rule to determine whether labor efficiency variances should be investigated. A labor efficiency variance will be investigated when the variancee is greater than either $100 or 10% of the standard labor cost. During September, the company used 500 direct labor hours at a rate of $15 per hour. Its standard rate is 475 direct labor hours at a rate of $14.50 per hour.
a. Determine the company's labor efficiency variance and whether it is favorable or unfavorable.
b. Should the variance be investigated?
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