Zinn Corporation recently agreed to a union contract provision that guarantees a minimum wage of $1,705 per month to each direct labour employee equivalent to 155 hours of work each month. Currently, 155 employees are covered by this provision. All direct labour employees are paid $11 per hour. Thus, until an employee works 155 hours, the remuneration is a fixed $1,705 per employee each month. Rusty Zinn, the assistant to the accountant was given the task of budgeting for the direct labour cost. Because of the contract provision, Rusty decided that the $264,275 (= 155 $1,705 per month) should be treated as a fixed monthly cost. Rusty was instructed to calculate each month's budget using the following formula: $264,275 + $6 per direct labour-hour.

Figures for the first three months of the fiscal year are as follows:

Check my work Zinn Corporation recently agreed to a union contract provision that guarantees a minimum wage of $1305 per month to each direct labour employee equivalent to 155 hours of work each month. Currently, 155 employees are covered by this provision. All direct labour employees are paid $11 per hour. Thus, until an employee works 155 hours. the remuneration is a xed $1,705 per employee each month. Rusty Zinn, the assistant to the accountant was given the task of budgeting for the direct labour cost. Because of the contract provision. Rusty decided that the $254,275 [= 155 x $1,705 per month} should be treated as a xed monthly cost. Rusty was instructed to calculate each month's budget using the following formula: $264,275 + $6 per direct labour-hour. Figures for the rst three months of the scal year are as follows: April May Jun! Direct labourhours planned and worked 27,500 42,000 62,000 Direct labour cost-.3 budgeted $ 429,275 $ 516,275 $ 636,275 Direct labour costs incurred $ 302,500 $ 462,000 $ 632,000 Variance 5 126,??5 P $ 54,275 r $ 45,725 U These gures are a source of concern because they show unfavourable variances when production is high, and favourable variances during slow months. The factory manager is certain that this trend does not reflect reality. Required: 1. This part of the question is not part of your Connect assignment. 2. Develop a formula for direct labour costs more appropriate to the actual cost behaviour, then recalculate the variances for April. May, and June. April May June