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Description of Direct Labor Variances
Richie Ventura operates a commercial painting business in Sacramento, which has a very tight labor market. Much of his 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:
-Three new employees were assigned to crew no. 5. Wages averaged $18.80 per hour for each employee; the crew took 2,550 hours to complete the work.-Based on his knowledge of the operation, articles in trade journals, and conversations with other painters, Ventura established the following standards:Typical hourly wage rate of crew personnel: $15Anticipated crew time for each unit: 34 hours-The paint quantity variance was $6,070F.-The operation did not go as smoothly as planned, with customer complaints and problems being much higher than expected.
Answer the following showing complete work for each one:
A. Compute Ventura's direct-labor variances.B. Is the direct-labor rate variance consistent with what you might expect in a tight labor market? Explain.C. What has likely happened that would give rise to customer complaints?
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