Delaware Inc. uses a standard cost system. The company experienced the following results related to direct labor in December 2008: Actual hours worked 49,500 Standard hours for production 46,200 Actual direct labor rate $9.25 Standard direct labor rate $9.75 a. Calculate the total actual payroll. b. Determine the labor rate variance c. Determine the labor quantity variance. .d. What concerns do you have about the variances in part (b) and (c)?

a. To calculate the total actual payroll, multiply the actual hours worked by the actual direct labor rate:

Total actual payroll = Actual hours worked * Actual direct labor rate = 49,500 * $9.25 = $457,875

b. To determine the labor rate variance, subtract the actual direct labor rate from the standard direct labor rate, and then multiply by the actual hours worked:

Labor Rate Variance = (Standard direct labor rate - Actual direct labor rate) * Actual hours worked = ($9.75 - $9.25) * 49,500 = $24,750

c. To determine the labor quantity variance, subtract the standard hours for production from the actual hours worked, and then multiply by the standard direct labor rate:

Labor Quantity Variance = (Actual hours worked - Standard hours for production) * Standard direct labor rate = (49,500 - 46,200) * $9.75 = $32,175

d. The concerns about the variances in parts (b) and (c) are as follows:
- The labor rate variance of $24,750 indicates that the company paid less for labor than the standard rate, which could mean the company negotiated better labor rates or hired lower-cost labor. This may be a positive variance.
- The labor quantity variance of $32,175 indicates that more hours were worked than what was expected for the production. This could be due to inefficiencies in the production process or issues with labor management. This variance may be a cause for concern as it suggests potential overstaffing or increased labor costs.

Overall, the variance analysis suggests that the company saved money on labor costs due to a lower labor rate but incurred additional costs due to inefficiencies in the actual labor hours used. These issues could be addressed to improve cost management and production efficiency.

To calculate the answers to the questions, we need to understand the formulas used for each variance.

a. Total actual payroll:
To calculate the total actual payroll, we need to multiply the actual hours worked by the actual labor rate:
Total actual payroll = Actual hours worked * Actual direct labor rate

b. Labor rate variance:
The labor rate variance is the difference between the actual labor rate and the standard labor rate, multiplied by the actual hours worked:
Labor rate variance = (Actual labor rate - Standard labor rate) * Actual hours worked

c. Labor quantity variance:
The labor quantity variance is the difference between the actual hours worked and the standard hours for production, multiplied by the standard labor rate:
Labor quantity variance = (Actual hours worked - Standard hours for production) * Standard labor rate

Now, let's calculate the answers:

a. Total actual payroll:
Total actual payroll = Actual hours worked * Actual direct labor rate
Total actual payroll = 49,500 * $9.25 = $457,875

b. Labor rate variance:
Labor rate variance = (Actual labor rate - Standard labor rate) * Actual hours worked
Labor rate variance = ($9.25 - $9.75) * 49,500 = -$24,750
Note: A negative value implies that the rate is lower than the standard rate.

c. Labor quantity variance:
Labor quantity variance = (Actual hours worked - Standard hours for production) * Standard labor rate
Labor quantity variance = (49,500 - 46,200) * $9.75 = $32,175

d. Concerns about the variances:
Based on the calculations:
- The labor rate variance is negative (-$24,750), indicating that the actual labor rate is lower than the standard labor rate. This could be a concern as it suggests that the company may be paying less for labor, which could potentially affect the quality or efficiency of the work.
- The labor quantity variance is positive ($32,175), indicating that more hours were worked than the standard hours for production. This could be a concern as it suggests that the company may have inefficient labor practices or production inefficiencies, resulting in an increase in labor costs.

These concerns may indicate a potential inefficiency in labor management or production processes, which could lead to increased costs and affect the profitability of Delaware Inc. It would be advisable for the company to investigate the variances further to identify the root causes and take appropriate actions to address them.