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Essay text:
Of particular interest are the direct labor variances for the fiscal period. Berkshire had a net labor rate variance (LRV) of $76,329 (see Table 3) which can be attributed to the "last minute" hiring of several replacement employees at a rate higher than the budgeted average of $8.00 per hour. In fact, the overall average labor rate was $8.17 per hour. The net labor efficiency variance (LEV) was even more startling at $903,976 (see Table 4A). This difference in quantity of labor hours contributed heavily to Berkshire's 36% overage in budgeted (static) direct labor. This gross difference in direct labor hours was reflected by increased production time on all four parts of unit production, increasing overall production time (on average) by nearly 15%...
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