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Use the following information for questions 19-20: Yolo Enterprises manufactures luxury cars. For 2018, Yolo utilized a standard costing system based on historical averages
Use the following information for questions 19-20: Yolo Enterprises manufactures luxury cars. For 2018, Yolo utilized a standard costing system based on historical averages which estimated that for each car, 10 direct labor hours will be used at an hourly rate of $20 per hour. In the first half of the year, things did not go well. The company produced 100,000 cars but had a $6,000,000 unfavorable Labor Rate Variance and a $12,000,000 unfavorable Labor Efficiency Variance. Although every worker was employed at the standard wage of $20 per hour, inefficiencies required a number of overtime hours to be incurred, which are paid at time and a half (150%). Halfway through the year, Yolo's new CEO decided to make a bold change. She believed that the company might achieve greater productivity if highly-skilled workers were employee at a higher wage. All of the current employees were fired (via group text) and a hiring initiative was immediately undertaken whereby the base hourly rate was increased 50% for everyone. In the second half of the year, these new employees produced twice as many cars as the first half of the year, in 1,000,000 fewer hours worked with no overtime incurred. 19. Including overtime, what was the average hourly rate that Yolo paid in the first six months? 20. For 2018 (the whole year), what is Yolo's Total Labor Variance? Include Favorable (F) or Unfavorable (U).
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