1. Theta Automotive

Scenario: Variance Analysis

Data: Theta Automotive budgeted $120,000 for direct labor costs based on 12,000 hours at $10 per hour. Actual direct labor costs amounted to $130,000 for 13,000 hours worked.

Requirements:

1. Calculate the direct labor rate variance and efficiency variance.
2. Determine whether the variances are favorable or unfavorable.
3. Discuss the causes of direct labor variances at Theta Automotive.
4. Analyze the impact of direct labor variances on Theta Automotive's profitability.
5. Evaluate Theta Automotive's budgeting and cost control processes.
6. Recommend improvements to Theta Automotive's variance analysis.