Direct manufacturing labor variances: price, efficiency, mix, and yield. Elena Martinez employs two workers in her wedding cake bakery. The first worker, Gabrielle, has been making wedding cakes for 20 years and is paid $25 per hour. The second worker, Joseph, is less experienced and is paid $15 per hour. One wedding cake requires, on average, 6 hours of labor. The budgeted direct manufacturing labor quantities for one cake are as follows:
That is, each cake is budgeted to require 6 hours of direct manufacturing labor, composed of 50% of Gabrielle’s labor and 50% of Joseph’s, although sometimes Gabrielle works more hours on a particular cake and Joseph less, or vice versa, with no obvious change in the quality of the cake. During the month of May, the bakery produces 50 cakes. Actual direct manufacturing labor costs are as follows:
1. What is the budgeted cost of direct manufacturing labor for 50 cakes?
2. Calculate the total direct manufacturing labor price and efficiency variances.
3. For the 50 cakes, what is the total actual amount of direct manufacturing labor used? What is the actual direct manufacturing labor input mix percentage? What is the budgeted amount of Gabrielle’s and Joseph’s labor that should have been used for the 50 cakes?
4. Calculate the total direct manufacturing labor mix and yield variances. How do these numbers relate to the total direct manufacturing labor efficiency variance? What do these variances tell you?
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