For this assignment you will write a memo, addressed to me, recommending which variances Matthews & Bros. Company should investigate for the period, along with your reasons. The assignment is Problem 17-46 found in Chapter 17 of your textbook (pages 692 and 693). This memo relates to Problem 17-45 which we completed in class. Your memo should address two questions:

1. Which variances management should investigate and why.

2. Which variances management should not investigate and why.

Answer each question in a separate paragraph of the memo. Be sure to support your opinion and incorporate it in your response.

17-45. Labor Mix and Yield Variances (LO 17-4) Matthews & Bros. is a local landscape construction company. In analyzing financial performance, the cost accountant compares actual results with a flexible budget. The standard direct labor rates used n the flexible budget are established each year at the time the annual plan is formulated and held constant for the entire year. The standard direct labor rates in effect for the current fiscal year and the standard hours allowed for the actual output of work for July are shown in the following schedule Worker Standard Standard Direct Classification Direct Labor Labor-Hours Rate per Hour Allowed for Output $40 1,500 35 2,000 25 2,500 The wage rates for each labor class increased under the terms of a new contract. The standard wage rates were not revised to reflect the new contract The actual direct labor-hours worked and the actual direct labor rates per hour experienced for the month of July were as follows: Worker Actual Direct Classification Labor Rate Actual Direct per Hour Labor-Hours $44 1,660 38 2,600 26 1,800 17-45. Labor Mix and Yield Variances (LO 17-4) Matthews & Bros. is a local landscape construction company. In analyzing financial performance, the cost accountant compares actual results with a flexible budget. The standard direct labor rates used n the flexible budget are established each year at the time the annual plan is formulated and held constant for the entire year. The standard direct labor rates in effect for the current fiscal year and the standard hours allowed for the actual output of work for July are shown in the following schedule Worker Standard Standard Direct Classification Direct Labor Labor-Hours Rate per Hour Allowed for Output $40 1,500 35 2,000 25 2,500 The wage rates for each labor class increased under the terms of a new contract. The standard wage rates were not revised to reflect the new contract The actual direct labor-hours worked and the actual direct labor rates per hour experienced for the month of July were as follows: Worker Actual Direct Classification Labor Rate Actual Direct per Hour Labor-Hours $44 1,660 38 2,600 26 1,800