EXERCISE 11-3 Direct Labor Variances [L03] SkyChefs I nc. prepares in-flight mea

Question

EXERCISE 11-3 Direct Labor Variances [L03] SkyChefs I nc. prepares in-flight meals for a number of major airlines. One of the company's vegetables. During the most recent week, the company prepared 4.000 of these meals using 960 direct labor-hours. The According to the standard cost card for this meal, it should require 0.25 direct labor-hours at a ucts is grilled salmon in dill sauce with baby new potatoes and spring company paid these direct labor workers a total of $9,600 for this work, or $10.00 per hour 75 per hour.

Explanation / Answer

Direct Labour Standard Rate (SR) $9.75 Standard Hours (SH) (0.25 *4000)       1,000 Actual Hours (AH)           960 Actual Rate (AR) $10.00 Labour Rate Variance: AH X SR Minus AH X AR                                     960 X $9.75 Minus           960 X 10.00        9,360 Minus        9,600              (240) Unfavourable Labour Efficiency Variance: SH X SR Minus AH X SR                                 1,000 X $9.75 Minus           960 X $9.75        9,750 Minus        9,360                390 Favourable

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