Industrial Solutions Company
Industrial Solutions Company manufactures a cleaning solvent.The company employs both skilled and unskilled workers.To produce one 55-gallon drum of solvent requires Materials A and B as well as skilled labor and unskilled labor.The standard and actual material and labor information is presented below:
Standard:
Material A: 30.25 gallons @ $1.25 per gallon
Material B: 24.75 gallons @ $2.00 per gallon
Skilled Labor: 4 hours @ $12 per hour
Unskilled Labor: 2 hours @ $ 7 per hour
Actual:
Material A: 10,716 gallons purchased and used @ $1.50 per gallon
Material B: 17,484 gallons purchased and used @ $1.90 per gallon
Skilled labor hours: 1,950 @ $11.90 per hour
Unskilled labor hours: 1,300 @ $7.15 per hour
During the current month Industrial Solutions Company manufactured 500 55-gallon drums.
Round all answers to the nearest whole dollar.
Refer to Industrial Solutions Company.What is the labor mix variance?

Question

Quizplus · Accepted Answer

Labor mix variance = (Actual skilled labor cost - Standard skilled labor cost) - (Actual unskilled labor cost - Standard unskilled labor cost)
= [(1,950 x $11.90) - (4 x 500 x $12)] - [(1,300 x $7.15) - (2 x 500 x $7)]
= [$23,205 - $24,000] - [$9,295 - $7,000]
= $795 U - $2,295 F
= $1,500 F
Therefore, the labor mix variance is $1,500 unfavorable.

Industrial Solutions Company Industrial Solutions Company Manufactures a Cleaning Solvent.The Company Employs Both