Reference no: EM132536947

CCC is an RMG manufacturing firm based in Asia. They specialize in selling sweaters and employ 400 workers. Each worker is normally supposed to work for 40 hours a week, 4 weeks a month. The company follows a no layoff policy, and due to low volume of order even if a worker has to work for less than 160 direct labor hours a month, s/he is paid for full 160 hours of work each month. For up to 160 direct labor hours worked each month, each worker is paid a wage of Rs. 25 per direct labor hour. However, for every hour worked in excess of 160 direct labor hours a month, wage rate is Rs. 35 per direct labor hour. Standard time required to produce each sweater is 2 direct labor hours.

• During October, the company received a big order and produced 35,000 sweaters and worked 85,000 direct labor hours.

Problem 1: What is the actual labor cost for producing 35,000 sweaters?

Problem 2: What is the standard labor cost for producing 35,000 sweaters?

Problem 3: Calculate the direct labor efficiency and rate variances. Show your work in the 'three-column format' [Hint: For finding the actual and standard direct labor rates, back-calculation will be required.]