Question

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.
$  

Answer 1

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