Question - Davenport Construction Associates compares actual results with a flexible budget. The standard direct labor rates used in the flexible budget are established each year at the time the annual plan is formulated and held constant for the entire year.
The standard direct labor rates in effect for the current fiscal year and the standard hours allowed for the actual output of remodeling work for September are shown in the following schedule:
Worker
Classification Standard
Direct Labor
Rate per Hour Standard Direct
Labor-Hours
Allowed for Output
I $ 29 510
II 21 510
III 16 510
The wage rates for each labor class increased under the terms of a new contract. The standard wage rates were not revised to reflect the new contract.
The actual direct labor-hours worked and the actual direct labor rates per hour experienced for the month of September were as follows:
Worker
Classification Actual Direct
Labor Rate per Hour Actual Direct
Labor-Hours
I $ 28 590
II 23 700
III 26 390
Required:
(a) Calculate total direct labor variance.
(b) Calculate direct labor price and efficiency variances.
(c) Calculate Direct labor mix and yield variances.