A company manufactures and ass

A company manufactures and assembles storage units. The standard output of its employees is 16 units per person in an eight hour day. There are two production lines, A and B, each of which has 10 employees. Workers on production line A are paid £7 per hour, but the workers on production line B are paid according to how many units are produced each day at the rate of £4 per completed unit and a standard output of 20 units per person in an 8 hour day.

The company produces the following information relating to the two production lines for one day:

(a) For each production line calculate the overall direct labour variance, the direct labour pay rate variance and the direct labour efficiency variance.

(b) Which of the two production lines appears to be more cost efficient? Give your reasons.

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