The following information describes a company's usage of direct labor in a recent period. The direct labor efficiency variance is: Actual hours used 45,000
Actual rate per hour $15.00
Standard rate per hour $14.50
Standard hours for units produced 47,000

Wisconsin snowmobile corp. is considering a switch to level production. cost efficiencies would occur under level production, and after tax costs would decline by $36,000, but inventory would increase by $300,000. wisconsin snowmobile would have to finance the extra inventory at a cost of 13.5 percent.a. determine the extra cost or savings of switching over to level production. should the company go ahead and switch to level production? b how low would interest rates need to fall before level production would be feasible?