Labor Mix and Yield Variances
Matt’s Eat ‘N Run has two categories of direct labor, unskilled, which costs $7.50 per hour, and skilled, which costs $15 per hour. Management has established standards per “equivalent friendly meal,” which has been defined as a typical meal consisting of a hamburger, a drink, and French fries. Standards have been set as follows:
Skilled labor |
2 minutes per equivalent meal |
Unskilled labor |
6 minutes per equivalent meal |
For the year, Matt’s sold 180,000 equivalent friendly meals and incurred the following labor costs:
Skilled labor |
6,000 hours |
$ 92,000 |
Unskilled labor |
15,000 hours |
180,000 |
Required
a. Compute labor price and efficiency variances.
b. Compute labor mix and yield variances.