Question:
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 $15 per hour. Management has established standards per "equivalent friendly meal," which has been defined as a typical meal consisting of a hamburger, a drink, and French fries. Standards have been set as follows:
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Skilled labor
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2 minutes per equivalent meal
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Unskilled labor
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6 minutes per equivalent meal
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For the year, Matt's sold 180,000 equivalent friendly meals and incurred the following labor costs:
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Skilled labor
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6,000 hours
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$ 92,000
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Unskilled labor
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15,000 hours
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180,000
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Required
a. Compute labor price and efficiency variances.
b. Compute labor mix and yield variances.