Question 11.1: A public accounting firm estimates that an audit will requir...

The direct labor variance for each type of auditor follows:

Note that the direct labor variance equals the sum of the labor rate and labor efficiency variances. The favorable labor rate variance means that, on average, the auditors were paid less than expected, although managers were paid more than expected. The unfavorable labor efficiency variance means that, on average, the auditors took longer to complete the audit than expected. The manager, however, spent less time on the audit than expected.