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A CPA firm estimates that an audit will require the following work:
Type of Auditor Expected Hours Cost per Hour Standard Costs
Manager 10 $50 $ 500
Senior 20 40 800
Staff 40 30 1,200
Totals 70 $2,500
The actual hours and costs were:
Type of Auditor Actual Hours Actual Cost per Hour Actual Costs
Manager 9 $52 $ 468
Senior 22 38 836
Staff 44 30 1,320
Totals 75 $2,624
Required:
Calculate the direct labor, wage rate, and labor efficiency variances for each type of auditor and interpret.
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