Problem 17-45 Labor Mix and Yield Variances (LO 17-4)

Matthews & Bros. is a local landscape construction company.In analyzing financial performance, the cost accountant comparesactual results with a flexible budget. The standard direct laborrates used in the flexible budget are established each year at thetime the annual plan is formulated and held constant for the entireyear.

The standard direct labor rates in effect for the current fiscalyear and the standard hours allowed for the actual output of workfor July are shown in the following schedule:

Worker Classification		Standard Direct Labor Rate per Hour				Standard Direct Labor-Hours Allowed for Output
I		$	47			1,680
II			42			2,240
III			32			2,800

The wage rates for each labor class increased under the terms ofa new contract. The standard wage rates were not revised to reflectthe new contract.

The actual direct labor-hours worked and the actual direct laborrates per hour experienced for the month of July were asfollows:

Worker Classification		Actual Direct Labor Rate per Hour				Actual Direct Labor-Hours
I		$	51			1,800
II			45			2,320
III			33			2,890

Required:

Calculate the dollar amount of the total direct labor variancefor July for Matthews & Bros. and break down the total varianceinto the following components:

a. Direct labor price and efficiency variances.(Indicate the effect of each variance by selecting "F" forfavorable, or "U" for unfavorable. If there is no effect, do notselect either option.)

	Directlabor price variance Efficiency variance

b. Direct labor mix and yield variances.(Do not round intermediate calculations. Indicate theeffect of each variance by selecting "F" for favorable, or "U" forunfavorable. If there is no effect, do not select eitheroption.)

	Directlabor mix variance

	Yieldvariance