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 4,000 of these meals using 960 direct labor-hours. The company paid its direct labor workers a total of $19,200 for this work, or $20.00 per hour. According to the standard cost card for this meal, it should require 0.25 direct labor-hours at a cost of $19.75 per hour Required 1. What is the standard labor-hours allowed (SH) to prepare 4,000 meals? 2. What is the standard labor cost allowed (SH x SR) to prepare 4,000 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.) 1,000 1. Standard labor-hours allowed 2. Standard labor cost allowed 3.Labor spending variance 4. Labor rate variance Labor efficiency variance

Explanation / Answer

1) Standard labor hours allowed Actual units produced*standard hours per unit 4000*.25 1,000 hrs answer 2) Standard labor cost allowed Standard labor hrs*standard price per hour 1000*19.75 19750 3) labor spending variance 19200-19750 550 F 4) labor rate variance (Actual rate - standard rate)*actual hours (20 - 19.75)*960 240 U labor Efficiency variance (Actual hours - standard hrs allowed)*Standard rate (960-1000)*19.75 790 F

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