Direct Labor Mix and Yield Variances
Delano Company uses two types of direct labor for the manufacturing of its products: fabricating and assembly. Delano has developed the following standard mix for direct labor, where output is measured in number of circuit boards.
Direct Labor Type | Mix | SP | Standard Cost |
||
Fabricating | 2 | hrs. | $25 | $50 | |
Assembly | 3 | 11 | 33 | ||
Total | 5 | hrs. | $83 | ||
Yield | 25 | units |
During the second week in April, Delano produced the following results:
Direct Labor | Type Actual Mix | ||
Fabricating | 25,000 | hrs. | |
Assembly | 50,000 | ||
Total | 75,000 | hrs. | |
Yield | 370,000 | units |
Required:
Instructions for parts 3 and 4: If a variance is zero, enter "0" and select "Not applicable" from the drop down box.
1. Calculate the yield ratio.
2. Calculate the standard cost per unit of the
yield. Round your answers to the nearest cent.
$ per unit of yield
3. Calculate the direct labor yield
variance.
$
4. Calculate the direct labor mix
variance.
$
yield ratio | |||||
TOTAL UNITS | $ 370,000 | ||||
TOTAL LABOR HOURS | 75,000.00 | ||||
4.93 | |||||
Direct Labor Type | Mix | SP | Standard | ||
Cost | |||||
Fabricating | 2 | hrs. | $25 | $50 | |
Assembly | 3 | 11 | $33 | ||
Total | 5 | hrs. | $83 | ||
Yield | 25 | units | |||
COST PER UNIT OF YIELD | $ 3.32 | ||||
$3.00 |
DIRECT LABOR YIELD VARIANCE = | (Actual units of labor inputs used – allowed for actual outputs) x (Standard average price per unit of labor input). | ||
FABRICATING | |||
Actual units of labor inputs used | 25000 | hrs | |
Allowed for actual outputs | = 2/25*370000 | 29600 | hrs |
Standard average price per unit of labor input | $25 | ||
DIRECT LABOR YIELD VARIANCE = | (25000-29600) *25 | ||
$ (115,000) | unfavorable | ||
Assembly | |||
Actual units of labor inputs used | 50000 | hrs | |
Allowed for actual outputs | = 3/25*370000 | 44400 | hrs |
Standard average price per unit of labor input | $11 | ||
DIRECT LABOR YIELD VARIANCE = | (50000-44400)*11 | ||
$ 61,600 | favorable | ||
Labor Mix Variance = (Revised Standard – Actual Hours Worked) X Standard Rate | |||
Revised standard Hours (RSH)= Actual Total Hours Worked X Standard Ratio of Workers | |||
FABRICATING | |||
Actual units of labor inputs used | 25000 | hrs | |
Standard average price per unit of labor input | $25 | ||
RSH = Actual Total Hours Worked X Standard Ratio of Workers | = 75000*2/5 | 30000 | hrs |
Labour Mix Variance | (30000-25000) * 25 | ||
$ 125,000 | FAVORABLE | ||
Assembly | |||
Actual units of labor inputs used | 50000 | hrs | |
Standard average price per unit of labor input | $11 | ||
RSH = Actual Total Hours Worked X Standard Ratio of Workers | = 75000*3/5 | 45000 | hrs |
Labour Mix Variance | (45000-50000) * 11 | ||
55000 | unfavorable |
Direct Labor Mix and Yield Variances Delano Company uses two types of direct labor for the...
Direct Labor Mix and Yield Variances Delano Company uses two types of direct labor for the manufacturing of its products: fabricating and assembly. Delano has developed the following standard mix for direct labor, where output is measured in number of circuit boards. Direct Labor Type Mix SP Standard Cost Fabricating 2 hrs. $20 $40 Assembly 3 14 42 Total 5 hrs. $82 Yield 25 units During the second week in April, Delano produced the following...
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