a.The labor rate variance for the month $2,640 (Favorable).
b.The labor efficiency variance for the month $484 (Unfavorable).
<h3>Solution:</h3>
The following is a calculation of labor rate variation and labor efficiency variance:
Variation in labor rates = Actual cost - (Actual hours x Standard rate)
= $77,220 - (6,600 × $12.10)
= $77,220 - 79,860
= $2,640 Favorable
Variation in labor efficiency = Standard rate (Actual hours - Standard hours)
= $12.10 × (6,600 - 1,600 × 4.1)
= $12.10 × 40
= $484 Unfavorable
<h3 /><h3>Direct Labor:</h3>
Direct labor (DL) expenses in accounting are the costs connected with paying people to produce a product or perform a service. Workers must be explicitly involved in the production or delivery of the product or service. One of the costs associated with manufacturing a product or delivering a service is direct labor expenditures. Furthermore, direct labor costs differ from indirect labor expenses.
The following are some examples of direct labor costs:
1.Wages paid to assembly line workers in a manufacturing context.
2.Wages given to restaurant kitchen staff in a service setting.
Learn more about labor-hours:
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