Direct Labor Efficiency Variance, Direct Labor Mix and Yield Variances Vet-Pro, Inc., produces a veterinary grade anti-anxiety mixture for pets with behavioral problems. Two chemical solutions, Aranol and Lendyl, are mixed and heated to produce a chemical that is sold to companies that produce the anti-anxiety pills. The mixture is produced in batches and has the following standards: Direct Material Standard Mix Standard Unit Price Standard Cost Aranol 3,000 gallons $4.00 per gallon $ 12,000 Lendyl 17,000   6.00     102,000      Total 20,000 gallons       $114,000 Yield 16,000 gallons         During March, the following actual production information was provided: Direct Material Actual Mix Aranol 60,000 gallons Lendyl 140,000        Total 200,000 gallons Yield 166,000 gallons Vet-Pro, Inc., also uses two different types of direct labor in producing the anti-anxiety mixture: mixing and drum-filling labor (the completed product is placed into 50-gallon drums). For each batch of 20,000 gallons of direct materials input, the following standards have been developed for direct labor: Direct Labor Type Mix SP Standard Cost Mixing 2,000 hrs. $14.00     $28,000     Drum filling 1,200   9.50     11,400          Total 3,200 hrs.       $39,400     Yield 16,000 gallons         The actual direct labor hours used for the output produced in March are also provided: Direct Labor Type Mix Mixing 18,000 hrs. Drum filling 12,000        Total 30,000 hrs. Yield 158,400 gallons Required: 1. Compute the direct labor mix and yield variances. (Round standard price of yield to four significant digits and mix proportion to three significant digits. Use the rounded numbers in the subsequent computations.) Mix variance $fill in the blank 1   Yield variance $fill in the blank 3   2. Compute the total direct labor efficiency variance. $fill in the blank 5

Cornerstones of Cost Management (Cornerstones Series)
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ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
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Chapter9: Standard Costing: A Functional-based Control Approach
Section: Chapter Questions
Problem 34P: Vet-Pro, Inc., produces a veterinary grade anti-anxiety mixture for pets with behavioral problems....
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Direct Labor Efficiency Variance, Direct Labor Mix and Yield Variances

Vet-Pro, Inc., produces a veterinary grade anti-anxiety mixture for pets with behavioral problems. Two chemical solutions, Aranol and Lendyl, are mixed and heated to produce a chemical that is sold to companies that produce the anti-anxiety pills. The mixture is produced in batches and has the following standards:

Direct Material Standard Mix Standard Unit Price Standard Cost
Aranol 3,000 gallons $4.00 per gallon $ 12,000
Lendyl 17,000   6.00     102,000
     Total 20,000 gallons       $114,000
Yield 16,000 gallons        

During March, the following actual production information was provided:

Direct Material Actual Mix
Aranol 60,000 gallons
Lendyl 140,000  
     Total 200,000 gallons
Yield 166,000 gallons

Vet-Pro, Inc., also uses two different types of direct labor in producing the anti-anxiety mixture: mixing and drum-filling labor (the completed product is placed into 50-gallon drums). For each batch of 20,000 gallons of direct materials input, the following standards have been developed for direct labor:

Direct Labor Type Mix SP Standard Cost
Mixing 2,000 hrs. $14.00     $28,000    
Drum filling 1,200   9.50     11,400    
     Total 3,200 hrs.       $39,400    
Yield 16,000 gallons        

The actual direct labor hours used for the output produced in March are also provided:

Direct Labor Type Mix
Mixing 18,000 hrs.
Drum filling 12,000  
     Total 30,000 hrs.
Yield 158,400 gallons

Required:

1. Compute the direct labor mix and yield variances. (Round standard price of yield to four significant digits and mix proportion to three significant digits. Use the rounded numbers in the subsequent computations.)

Mix variance $fill in the blank 1  
Yield variance $fill in the blank 3  

2. Compute the total direct labor efficiency variance.
$fill in the blank 5   

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