Question

M & Y Company’s standard direct labor rates in effect for the fiscal year ending June 30 and standard hours allowed for the output in April are:

Standard Standard DLHrs

DL Rate/hr Allowed for Output

Engineering 8.00 500

Carprentry 7.00 500

Masonry 5.00 500

The wage rates for each labor class increased on January 1 under the terms of a new union contract. The standard wage rate was not revised. The actual direct labor hours (DLH) and the actual direct labor rate s for April were as follows:

Actual Rate Actual DLH

Engineering 8.50 550

Carprentry 7.50 650

Masonry 5.40 375

How much is the labor mix and yield variances?

Answer 1

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1. Labor Mix Variance = (Actual Hours Used at Standard Mix) – (Actual Hours used at Actual Mix) * Standard Hourly Price

Labor Mix Variance for the given values

Engineering	Carpentry	Masonry
(500 – 550) * 8	(500 – 650) * 7	(500- 375) *5
-50 * 8	-150* 7	125 * 5
-400	-1050	625

2. Labor Yield Variance = (Actual Hours used at Actual Mix) - (Actual Hours Used at Standard Mix) * Standard Hourly Price

Labor Yield Variance for the given values

Engineering	Carpentry	Masonry
(550-500) * 8	(650-500) * 7	(375-500) *5
50 * 8	150* 7	-125 * 5
400	1050	-625