The following data pertain to Colgate Palmolive€™s liquid tilling line during the first 10 months of a particular year. The standard ratio of direct-labor hours to machine hours is 4:1. The standard direct-labor rate is $15.08.

Source of data: Alan S.Levitan and Sidney J.Baxendale,€Analyzing the Labor Efficiency Variance to Signal Process Engineering Problems,€

Required:
1. Show how the following amounts were calculated for the month of January:
a. Standard direct-labor hours.
b. Direct-labor efficiency variance.
2. Calculate the following amounts.
a. The standard direct-labor cost for each of the 10 months.
b. For each month, 20 percent of the standard direct-labor cost.
3. Suppose management investigates all variances in excess of 20 percent of standard cost. Which variances will be investigated?
4. Suppose the standard deviation for the direct-labor efficiency variance is $5,000. Draw a statistical control chart, and plot the variance data.
5. Using the chart developed in requirement (4), which variances will be investigated?
6. The variances for March. April, and June are much larger than the others. Suggest at least one reason forthis.

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Colgate Palmolive: Direct-Labor Efficiency Variance Data* Standard Direct-Labor Hours Actual Direct-Labor Hours Direct-Labo Efficiency Machine Units Produced Hours .165.5 31,943 100.3 Variance 662.00374.004,343 2,823 ....17,191 January February 50,478 ...401.20 214.00 April212,274 May4 June. 713.8 .160.0 82,436 2320 36,208. 104.0 .2,855.201.495.75 364.00 536.50 283.00 317.50 328.50 158.00 48,390. ..6 640.00 . 928.00 416.00 384.00 4,162 5,904 2,006 1,003 837 1,960 August... September31,560 October 33,483 96.0. 96.0 384.00 28,191 72.0.. 288.00