hefs, Inc., prepares in-flight meals for a number of major airlines. One of the
ID: 2535610 • Letter: H
Question
hefs, Inc., prepares in-flight meals for a number of major airlines. One of the company's products is grilled salmon in dill sau with baby new potatoes and spring vegetables. During the most recent week, the company prepared 4,800 1.400 direct labor-hours. The company paid its direct labor workers a total of $18,200 for this work, or $13.00 per hour According to the standard cost card for this meal, it should require 0.30 direct labor-hours at a cost of S12.50 per hour 45040 Required 1. What is the standard labor-hours allowed (SH) to prepare 4,800 meals? 2. What is the standard labor cost allowed (SH 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 "Fl" for favorable, "U" for unfavorable, and "None" for no effect (Le, zero variance). Input all amounts as positive values. Do no round intermediate calculations.) 1 Standard labor-hours all 2 Standard labor cost allowed 3. Labor spending variance 4 Labor rate variance erencesLabor ficiency varianceExplanation / Answer
Solution:
1) Standard Labor Hours Allowed = Production 4,800 Meals x Required Labor Hours per meal 0.30 hours
= 1,440 direct labor hours
2) Standard Labor Cost Allowed to prepare 4,800 meals = Standard Labor Hours Allowed x Rate per hour
= 1,440 * $12.50
= $18,000
3) Labor Spending Variance = Total Standard Labor Cost – Total Actual Labor Cost
= $18,000 - $18,200
= $200 Unfavorable
4) Labor Rate Variance = Actual Hours Worked (Actual Rate – Standard Rate)
= 1400 ($13 - $12.50)
= 1400*0.5
= $700 Unfavorable
Labor Efficiency Variance = Standard Rate (Actual Hours – Std Hours allowed for actual production)
= 12.50 (1400 – 1440)
= 12.50*40
= $500 Favorable
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