Calculate the labor efficiency variance

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Jake’s Cheese Company produces gourmet cheese for resale at local grocery stores. Jake’s expected to use 0.50 direct labor hours to produce one unit (batch) of product at a cost of $10 per hour. Actual results are in for last year, which indicates 45,000 batches of cheese were sold. The company's direct labor workforce worked 27,500 hours at $9 per hour.

Required:

(1) Calculate the labor rate variance.

(2) Calculate the labor efficiency variance.

(3) Suggest several possible reasons for the labor rate and efficiency variances.

Reference no: EM132061140

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