The director of cost management for Portland Instrument Corporation compares each months actual results with a monthly plan. The standard direct-labor rates for the year just ended and the standard hours allowed, given the actual output in April, are shown in the following schedule.

Standard Direct-Labor Rate per Hour Standard Direct-Labor Hours Allowed, Given April Output

Labor class III$24.90 1,900

Labor class II 21.90 1,900

Labor class I 15.90 1,900

A new union contract negotiated in March resulted in actual wage rates that differed from the standard rates. The actual direct-labor hours worked and the actual direct-labor rates per hour experienced for the month of April were as follows:

Actual Direct-Labor Rate per Hour Actual Direct-Labor Hours

Labor class III$26.70 2,000

Labor class II 23.40 2,200

Labor class I 17.10 1,650

Required:

1-a. Compute the direct-labor rate variance for each labor class for the month of April.

1-b. Compute the direct-labor efficiency variance for each labor class for the month of April.

2. Which of the following could be considered an advantage of using a standard-costing system in which the standard direct-labor rates are not changed during the year to reflect such events as a new labor contract?