For DR.SAMUELSON, ONLY

Week 6 Case Analysis

Prepare a complete evaluation of the direct labor variances in the scenario given below. Show all calculations and explain your results.

Davis Orthotics produces custom made prostheses. The process is labor intensive. The speed at which a device can be built depends on the skill level of the individual worker.

Management has established a standard of 4 labor hours per device. The standard wage rate is $25 per hour.

During a recent month, 1,250 custom devices were produced. Management was pleased that only 4,850 labor hours were worked, however total wages amounted to $130,950.

Compute the total variance for labor, and determine how much is related to rate and efficiency components.

ALSO, Chapter 22 discusses flexible budgeting. Explain how flexible and traditional fixed budgeting differ. What are the advantages of flexible budgeting?(250 words min)

Due Thursday by 12:00(noon)12/3/2015.