Fundamentals Of Cost Accounting (6th Edition)
Fundamentals Of Cost Accounting (6th Edition)
6th Edition
ISBN: 9781259969478
Author: WILLIAM LANEN, Shannon Anderson, Michael Maher
Publisher: McGraw Hill Education
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Chapter 17, Problem 32E

Labor Mix and Yield Variances

Matt’s Eat ’N Run has two categories of direct labor: unskilled, which costs $10 per hour, and skilled, which costs $20 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:

Chapter 17, Problem 32E, Labor Mix and Yield Variances Matts Eat N Run has two categories of direct labor: unskilled, which , example  1

For the year, Matt’s sold 180,000 equivalent friendly meals and incurred the following labor costs:

Chapter 17, Problem 32E, Labor Mix and Yield Variances Matts Eat N Run has two categories of direct labor: unskilled, which , example  2

Required

  1. a.      Compute labor price and efficiency variances.
  2. b.      Compute labor mix and yield variances.

a.

Expert Solution
Check Mark
To determine

Compute materials price and Materials efficiency variances.

Answer to Problem 32E

The value of materials price variance is $5,000 U and ,materials efficiency variance is $0 for skilled labor, and for unskilled labor, the materials price variance is $90,000 U and materials efficiency variance is $30,000 F.

Explanation of Solution

Materials price variance:

Materials price variance is resultant materials price that has been computed or derived at the end of the accounting period for which the computations are being done.

Materials efficiency variance:

Materials efficiency variance is the resultant Materials efficiency that has been computed or derived at the end of the accounting period for which the computations are being done.

Compute the materials price variance:

ParticularsSkilled laborUnskilled labor
Materials variance:  
Actual (AP×AQ)$125,000$240,000
Standard (SP×AQ)$120,000$150,000

Materials variance

(ActualStandard)

$5,000 U$90,000 U

Table: (1)

Compute the Materials efficiency variance:

ParticularsSkilled laborUnskilled labor

Materials mix variance:

  
Actual (SP×AQ)$120,000$150,000
Standard (SP×ASQ)$105,000$157,500

Materials mix variance

(ActualStandard)

$15,000U$7,500F
   
Materials yield variance:  
Actual (SP×ASQ)$105,000$157,500
Standard (SP×SQ)$120,000$180,000

Materials yield variance

(ActualStandard)

$15,000F$22,500F
   

Materials efficiency variance

(Mix variance  Yield variance)

$0$30,000F

Table: (2)

MeasureSkilled laborUnskilled labor
AQ       6,000        15,000
SP$20.00$10.00
ASQ       5,250(1)       15,750(2)
SQ       6,000(3)       18,000(4)

Table: (3)

Thus, the value of materials price variance is $5,000 U and materials efficiency variance is $0 for skilled labor and for unskilled labor, the materials price variance is $90,000U and materials efficiency variance is $30,000F.

Working note 1:

Compute the ASQ for Skilled labor:

ASQ = Ratio of skilled labor ×Total AQ=0.25 × 21,000=5,250

Working note 2:

Compute the ASQ for unskilled labor:

ASQ = Ratio of unskilled labor ×Total AQ=0.75 × 21,000=15,750

Working note 3:

Compute the SQ of Skilled labor:

SQ = Units appropriation in for SP× Acutal output= 2/60×180,000=6,000

Working note 4:

Compute the SQ of Unskilled labor:

SQ = Units appropriation in for SP× Acutal output= 6/60×180,000=18,000

b.

Expert Solution
Check Mark
To determine

Compute materials mix and materials yield variances.

Answer to Problem 32E

The value of materials mix and materials yield variances of skilled labor is $15,000 U and $15,000 F respectively, and the value of materials mix and materials yield variances of unskilled labor $7,500 and $22,500 respectively.

Explanation of Solution

Materials mix variance:

Materials mix variance is the resultant market Materials mix that has been computed or derived at the end of the accounting period for which the computations are being done for two or more than two products.

Materials yield variance:

Materials yield variance is the resultant difference between the costs of finished goods expected from a specific amount of raw material that has been computed or derived at the end of the accounting period for which the computations are being done.

Compute the materials mix variance and materials yield variance for skilled labor and unskilled labor:

ParticularsSkilled laborUnskilled labor

Materials mix variance:

  
Actual (SP×AQ)$120,000$150,000
Standard (SP×ASQ)$105,000$157,500

Materials mix variance

(ActualStandard)

$15,000 U$7,500 F
   
Materials yield variance:  
Actual (SP×ASQ)$105,000$157,500
Standard (SP×SQ)$120,000$180,000

Materials yield variance

(ActualStandard)

$15,000 F$22,500 F
   

Materials efficiency variance

(Mix variance  Yield variance)

$0$30,000 F

Table: (4)

MeasureSkilled laborUnskilled labor
AQ       6,000        15,000
SP$20.00$10.00
ASQ       5,250(1)       15,750(2)
SQ       6,000(3)       18,000(4)

Table: (5)

Thus, the value of materials mix and materials yield variances of skilled labor are $15,000 U and $15,000 F respectively, and the value of materials mix and materials yield variances of unskilled labor $7,500 and $22,500 respectively.

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Chapter 17 Solutions

Fundamentals Of Cost Accounting (6th Edition)

Ch. 17 - How could a professional sports firm use the mix...Ch. 17 - Prob. 12CADQCh. 17 - How could a hospital firm use the mix variance to...Ch. 17 - Prob. 14CADQCh. 17 - There is no reason to investigate favorable...Ch. 17 - Prob. 16CADQCh. 17 - Consider a firm in the sharing economy, such as...Ch. 17 - Prob. 18ECh. 17 - Prob. 19ECh. 17 - Prob. 20ECh. 17 - Variable Cost Variances: Materials Purchased and...Ch. 17 - Prob. 22ECh. 17 - Industry Volume and Market Share Variances DB Ice...Ch. 17 - Olive Tree Products sold 72,000 units during the...Ch. 17 - Prob. 25ECh. 17 - Sales Mix and Quantity Variances A-Zone Media...Ch. 17 - Prob. 27ECh. 17 - Sales Mix and Quantity Variances The restaurant at...Ch. 17 - Sales Mix and Quantity Variances Chow-4-Hounds...Ch. 17 - Materials Mix and Yield Variances Stacy, Inc.,...Ch. 17 - Materials Mix and Yield Variances Johns...Ch. 17 - Labor Mix and Yield Variances Matts Eat N Run has...Ch. 17 - Flexible Budgeting, Service Organization KB is a...Ch. 17 - Prob. 34ECh. 17 - Prob. 35ECh. 17 - Sales Price and Activity Variances EZ-Tax is a tax...Ch. 17 - Write a memo to the senior manager of EZ-Tax...Ch. 17 - Variable Cost Variances The standard direct labor...Ch. 17 - Refer to the information in Exercise...Ch. 17 - Prob. 40PCh. 17 - Variable Cost Variances: Materials Purchased and...Ch. 17 - Industry Volume and Market Share Variances:...Ch. 17 - Industry Volume and Market Share: Missing Data The...Ch. 17 - Sales Mix and Quantity Variances Lake Cellars...Ch. 17 - Analyze Performance for a Restaurant Dougs Diner...Ch. 17 - Nonmanufacturing Cost Variances FSBCU is a...Ch. 17 - Performance Evaluation in Service Industries Bay...Ch. 17 - Refer to the information in Problem...Ch. 17 - Prob. 49PCh. 17 - Refer to the data for the Peninsula Candy Company...Ch. 17 - Materials Mix and Yield Variances Plano Products...Ch. 17 - Pinnuck Products makes a liquid solvent using two...Ch. 17 - Labor Mix and Yield Variances Matthews Bros, is a...Ch. 17 - Refer to the information in Problem...Ch. 17 - Derive Amounts for Profit Variance Analysis...Ch. 17 - Flexible Budget Oak Hill Township operates a motor...
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