Question:

Hallaway produces gears for the Tree Motorcycle Company.

At the beginning of the year, they had the following standard costs for one batch of gears:

Direct labour (2 hours @ $15.00 per hour)

$ 30.00

The actual results for the year are:

Batches produced	70,000
Direct labour hours	135,000
Direct labour cost per hour	$ 15.50

Required:

Calculate the labour variances and use your solution to answer the following questions.

NOTE: Please enter all variances as positive numbers.

The amount of the direct labour rate variance, also called the direct labour price variance, is $____________.

Indicate if the direct labour rate variance is favourable (enter the letter F) or unfavourable (enter the letters UF).

The amount of the direct labour efficiency variance, also called the direct labour usage variance, is $____________.

Indicate if the direct labour efficiency variance is favourable (enter the letter F) or unfavourable (enter the letters UF).

The total labour variance, also called the direct labour flexible budget variance, is $___________.

Indicate if the total labour variance is favourable (enter the letter F) or unfavourable (enter the letters UF).

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