Step-by-step explanation:
1. To calculate the actual (direct labor) wage rate per hour paid last month, we divide the total wages by the total direct labor hours used:
Actual (direct labor) wage rate per hour = Total wages / Total direct labor hours
Given:
Total wages = $37,440
Total direct labor hours = 2,080
Actual (direct labor) wage rate per hour = $37,440 / 2,080
Calculating the above expression:
Actual (direct labor) wage rate per hour = $18.00 (rounded to the nearest cent)
Therefore, the actual (direct labor) wage rate per hour paid last month is $18.00.
2. The direct labor rate variance can be calculated by comparing the actual wage rate per hour with the standard wage rate per hour and multiplying it by the actual hours used:
Direct labor rate variance = (Actual (direct labor) wage rate per hour - Standard wage rate per hour) * Total direct labor hours
Given:
Actual (direct labor) wage rate per hour = $18.00 (from previous calculation)
Standard wage rate per hour = $16.00
Total direct labor hours = 2,080
Direct labor rate variance = ($18.00 - $16.00) * 2,080
Calculating the above expression:
Direct labor rate variance = $4,160.00
Therefore, the direct labor rate variance is $4,160.00.
3. The direct labor efficiency variance measures the difference between the actual hours used and the standard hours allowed, multiplied by the standard wage rate per hour:
Direct labor efficiency variance = (Actual direct labor hours - Standard direct labor hours) * Standard wage rate per hour
Given:
Actual direct labor hours = 2,080
Standard direct labor hours = (3 hours per return) * 700 returns = 2,100
Standard wage rate per hour = $16.00
Direct labor efficiency variance = (2,080 - 2,100) * $16.00
Calculating the above expression:
Direct labor efficiency variance = -$320.00
Therefore, the direct labor efficiency variance is -$320.00.
4. The direct labor rate variance can impact the direct labor efficiency variance if the firm paid a higher or lower wage rate per hour compared to the standard rate. If the actual (direct labor) wage rate per hour is higher than the standard rate, it will contribute to a negative (unfavorable) direct labor rate variance. This can affect the efficiency variance because employees may be motivated to work more slowly or inefficiently if they feel they are being paid more than they deserve. Conversely, if the actual wage rate per hour is lower than the standard rate, it can lead to a positive (favorable) direct labor rate variance, which may encourage employees to work more efficiently.
In summary, the direct labor rate variance can influence the direct labor efficiency variance by affecting employee motivation, productivity, and their perception of fair compensation.