SkyChefs, Inc., prepares in-flight meals for a number of major airlines. One of

Question

SkyChefs, Inc., prepares in-flight meals for a number of major airlines. One of the company's products is grilled salmon in dill sauce with baby new potatoes and spring vegetables. During the most recent week, the company prepared 4,800 of these meals using 2,350 direct labor-hours. The company paid its direct labor workers a total of $23,500 for this work, or $10.00 per hour. According to the standard cost card for this meal, it should require 0.50 direct labor-hours at a cost of $9.40 per hour Required: 1. What is the standard labor-hours allowed (SH) to prepare 4,800 meals? 2. What is the standard labor cost allowed (SH x SR) to prepare 4,800 meals? 3. What is the labor spending variance? 4. What is the labor rate variance and the labor efficiency variance? (For requirements 3 and 4, indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Do no round intermediate calculations.) 1. Standard labor-hours allowed 2 Standard labor cost allowed 3Labor spending variance 4Labor rate variance Labor efficiency variance

Explanation / Answer

1 Standard labor hours allowed 2400 (4800*.5) 2 Standar labor cost allowed 22560 (2400*9.4) 3 Labor spending variance 940 unfavorable (23500-22560) 4 Actual rate 10.00 per hour Labor rate variance = (Actual rate -Standard rate) * Actual hours Labor rate variance = (10 -9.40) * 2350 1410 unFavorable Standard labor hours for actual production 4800*.5 2,400 Hours Labor Effeciency variance= (Standard hours for acual production -Actual hours) *Standard rate Labor Effeciency variance= (2400-2350)* 9.4 470 Favorable

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