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i Safari File Edit View History Bookmarks Window Help ] 63% L Tue 2:41 PM ao: dy Guided Solutions and Study Help 201870-Second Summer 2018-A Chapter 10 Homework Screen Shot 2018-07.1.43 PM 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 5,600 of these meals using 2,700 direct labor-hours. The company paid these direct labor workers a total of $21,600 for this work, or $8.00 per hour According to the standard cost card for this meal, it should require 0.50 direct labor-hours at a cost of $7.50 per hour Required: 1. According to the standards, what direct labor cost should have been incurred to prepare 5,600 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 rate 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 variance Labor efliciency variance

Explanation / Answer

1. Calculation of Standard labor cost to prepare 5,600 meals:

Total direct labor hours allowed

[Standard labor hours to prepare 5,600 meals = 5,600 meals x 0,5 hour per meal

Total direct labor cost allowed

[Standard labor cost to prepare 5,600 meals = 2,800 hours x $7.50 per hour]

$600 (U)

2. Calculation of Direct Labor rate variance and Direct labor efficiency variance:

Direct labor rate variance = Actual labor hours x (Std.rate - Actual rate)

   = 2,700 x ($7.50 - $8.00)

= $1,350 (Unfavorable)

Direct labor efficiency variance = Std. rate x (Standard hours for actual output - Actual hours)

= $7.50 x (2,800 - 2,700)

= $750 (Favorable)

Direct labor cost variance = Labor rate variance + Labor efficiency variance

= $1,350 (U) + $750 (F)

= $600 (U)

Number of meals produced 5,600 meals Standard direct labor hours per meal 0.50 hour

Total direct labor hours allowed

[Standard labor hours to prepare 5,600 meals = 5,600 meals x 0,5 hour per meal

2,800 hours Standard direct labor cost per meal $7.50

Total direct labor cost allowed

[Standard labor cost to prepare 5,600 meals = 2,800 hours x $7.50 per hour]

$21,000 a. Actual direct labor cost incurred $21,600 b. Total standard direct labor cost $21,000 Total direct labor cost variance [a - b]

$600 (U)

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