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Given the following information for Direct Labour: budgeted budgeted budgeted Employee labour hours labour rate labour cost (in hours) (in $/hour) (in $) Senior 40

Given the following information for Direct Labour:

budgeted

budgeted

budgeted

Employee

labour hours

labour rate

labour cost

(in hours)

(in $/hour)

(in $)

Senior

40

30.00

1,200

Junior

480

20.00

9,600

Temporary

120

15.00

1,800

actual

actual

actual

Employee

labour hours

labour rate

labour cost

(in hours)

(in $/hour)

(in $)

Senior

60

30.10

1,800

Junior

490

20.02

9,800

Temporary

80

14.90

1,200

The budget is based on production of 40 units. Actual production was 45 units.

Requried:

Calculate the following variances:

  1. Labour Rate
  2. Labour Efficiency
  3. Labour mix variance
  4. Labour yield variance
  5. Assume that the Labour rate and Labour yield variances are inter-linked. Give a possible explanation for the mix and yield variances.

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