Reference no: EM132715655

Mae Ann operates a commercial painting business which has a very tight labor market. Much of her work focuses on newly constructed apartments and townhouses.

The following data relate to crew no. 5 for a recently concluded period when 85 apartment units were painted:

a.) Three new employees were assigned to crew no. 5. Wages averaged P180 per hour for each employee; the crew took 2,560 hours to complete the work.

b.) Based on her knowledge of the operation, and conversations with other painters, she established the following standards: Hourly wage rate of crew personnel: P160 Anticipated crew time for each unit: 34 hours

c.) The paint quantity variance was P60,700 F.

d.) The operation did not go as smoothly as planned, with customer complaints and problems being much higher than expected.

Required:

Problem 1. Compute the direct-labor variances.

Problem 2. Is the direct-labor rate variance consistent with what you might expect in a tight labor market? Explain.

Problem 3. Analyze the information given and that you calculated, and determine what likely happened that would give rise to customer complaints?