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Standard Labor Variance for CPA firm audit
A CPA firm estimates that an audit will require the following work:
Type of Auditor Expected Hours Cost per hour Standard CostsManager 10 $50 $500Senior 20 40 800Staff 40 30 1200Totals 70 $2500
The actual hours and costs were:
Type of Auditor Actual Hours Actual Cost per hour Actual CostsManager 9 $52 $468Senior 22 38 836Staff 44 30 1320Totals 75 $2624
Required:
Calculate the direct labor, wage rate, and labor efficiency variances for each type of auditor and interpret.
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