Motts Incorporated has a standard cost system in which the standard direct labor for a particular product is 0.50 hours at the standard rate of $21.00 per hour. The company has reported the following actual results for the product for October:
Required:a. Compute the labor rate variance for October.b. Compute the labor efficiency variance for October.

a. Labor rate variance = (Actual hours × Actual rate) − (Actual hours × Standard rate)= $22,995 − (1,050 hours × $21.00 per hour)= $22,995 − $22,050= $945 Unfavorable
b. Standard hours = 2,300 units × 0.50 hours per unit = 1,150 hoursLabor efficiency variance = (Actual hours × Standard rate) − (Standard hours × Standard rate)= (Actual hours − Standard hours) × Standard rate= (1,050 hours − 1,150 hours) × $21.00 per hour= (−100 hours) × $21.00 per hour= $2,100 Favorable