O’Connell & Associates, a firm of architects, has three levels of professional staff: principals (managers), who manage all aspects of the architectural job; senior architects, who are responsible for the main designs; and junior architects, who provide technical support. Budgeted costs for five architectural jobs done over a recent period are as follows:
Actual hours worked and the actual rates per hour to complete the five jobs are
1. Calculate the total direct labour price and efficiency variances for the five jobs.
2. Calculate the total direct labour mix and yield variances for the five jobs.
3. Comment on your results in requirements 1 and 2.
4. How might managers use information about the direct labour yield and mix variances?