The director of cost management for Portland Instrument Corporation compares each month's actual Problem 10-41 results with a monthly plan. The standard direct-labor rates for the year just ended and the standard Direct-Labor Variances hours allowed, given the actual output in April, are shown in the following schedule. (LO 10-1, 10-3) 1(b). Direct-labor efficiency Standard Direct-Labor Standard Direct-Labor Hours variance, labor class III: Rate per Hour Allowed, Given April Output $800 U Labor class III . $16.00. 500 Labor class II 14.00 500 Labor class I . 10.00 . 500 454 Chapter 10 Standard Costing and Analysis of Direct Costs A new union contract negotiated in March resulted in actual wage rates that differed from the stan- dard 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 Actual Direct-Labor Rate per Hour Hours Labor class III. $17.20. 550 Labor class II 15.00 650 Labor class I. 10.80 . 375 Required: 1. Compute the following variances for April. Indicate whether each is favorable or unfavorable. a. Direct-labor rate variance for each labor class. b. Direct-labor efficiency variance for each labor class. 2. Discuss the advantages and disadvantages of 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. 3. Build a spreadsheet: Construct an Excel spreadsheet to solve requirements (1) above. Show how the solution will change if the following information changes: the actual labor rates were $16.95, $15.10, and $10.60 for labor classes III, II, and I, respectively