D HW 7 (Ch 8) Science ABC ? ezto.mheducation.com/hm.tpx w canvas ? Academica } M

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D HW 7 (Ch 8) Science ABC ? ezto.mheducation.com/hm.tpx w canvas ? Academica } Mail Apple Bing G Google Yahoo How! ACCOUNTING Question 4 (of & 4. 3,00 points Exercise 8-5 Direct Labor Variances [LO8-5 SkyChefs, Inc., prepares in-fight meals for a number of major airines. One of the company's products is grilled salmon in dil sauce with baby new potatoes and spring vegetables. During the most recent week, the company prepared 7.200 of these meals using 3,500 direct labor-hours. The company paid these direct According to the standard cost card for this meal, it should require 0.50 direct labor-hours at a cost of $8.50 per hour . According to the standards, what direct labor cost should have been incurred to prepare 7.200 meals? How much does this differ from the actual direct labor cost? (Round labor-hours per meal and labor cost per hour to 2 decimal places Number of meals prepared Standard direct labor-hours per meal Total direct labor-hours allowed Standard direct labor cost per hour Total standard direct labor cost Actual cost incurred Total standard direct labor cost Total direct labor variance 2 Break down the difference computed in (1) above into a labor rabe variance and a labor efficiency variance. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance)) Labor rate Labor efficiency variance O Type here to search

Explanation / Answer

a. Number of meals prepared              7,200 b. Standard direct labor hours per meal $ 0.50 c. Total direct lobor hours allowed (a X b)              3,600 d. Standard direct labor cost per hour $ 8.50 e. Total direct standard labor cost (c X d) $ 30,600.00 f. Actual cost incurred $ 31,500.00 Total Standard direct labor cost (above) $ 30,600.00 Total direct lobor variance $       900.00 Unfavourable Labor rate variance = Actal hours (Actual rate - Standard rate) 3,500 hours ($9 - $8.50) $   1,750.00 Unfavourable Labor efficiency variance = Standard rate (Actual hours - Standard hours) $8.50 (3,500 hours - 3,600 hours) $       850.00 Favourable

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