Question

# Direct Labor Efficiency Variance, Direct Labor Mix and Yield Variances Vet-Pro, Inc., produces a veterinary grade...

Direct Labor Efficiency Variance, Direct Labor Mix and Yield Variances

Vet-Pro, Inc., produces a veterinary grade anti-anxiety mixture for pets with behavioral problems. Two chemical solutions, Aranol and Lendyl, are mixed and heated to produce a chemical that is sold to companies that produce the anti-anxiety pills. The mixture is produced in batches and has the following standards:

 Direct Material Standard Mix Standard Unit Price Standard Cost Aranol 3,000 gallons \$4.00 per gallon \$ 12,000 Lendyl 17,000 6.00 102,000 Total 20,000 gallons \$ \$114,000 Yield 16,000 gallons

During March, the following actual production information was provided:

 Direct Material Actual Mix Aranol 60,000 gallons Lendyl 140,000 Total 200,000 gallons Yield 166,000 gallons

Vet-Pro, Inc., also uses two different types of direct labor in producing the anti-anxiety mixture: mixing and drum-filling labor (the completed product is placed into 50-gallon drums). For each batch of 20,000 gallons of direct materials input, the following standards have been developed for direct labor:

 Direct Labor Type Mix SP Standard Cost Mixing 2,000 hrs. \$14.00 \$28,000 Drum filling 1,200 9.50 11,400 Total 3,200 hrs. \$39,400 Yield 16,000 gallons

The actual direct labor hours used for the output produced in March are also provided:

 Direct Labor Type Mix Mixing 18,000 hrs. Drum filling 12,000 Total 30,000 hrs. Yield 158,400 gallons

Required:

1. Compute the direct labor mix and yield variances. (Round standard price of yield to four significant digits and mix proportion to three significant digits. Use the rounded numbers in the subsequent computations.)

 Mix variance \$ Favorable Yield variance \$ Favorable

2. Compute the total direct labor efficiency variance.
\$  Favorable

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