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 6,200 of these meals using 1,200 direct labor-hours. The company paid its direct labor workers a total of $10,800 for this work, or $9.00 per hour.
According to the standard cost card for this meal, it should require 0.20 direct labor-hours at a cost of $8.50 per hour.
Required:
1. What is the standard labor-hours allowed (SH) to prepare 6,200 meals?
2. What is the standard labor cost allowed (SH × SR) to prepare 6,200 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.)
|
Solution
Standard labor hours Allowed | 1240 |
Standard labor cost allowed | $ 10,540.00 |
Labor Spending Variance | $ 260.00 |
Labor rate Variance | $ 600.00 |
Labor Efficiency variance | $ 340.00 |
Working
Standard DATA for | 6200 | Meals | |
Quantity (SQ) | Rate (SR) | Standard Cost | |
[A] | [B] | [A x B] | |
Direct labor | ( 0.2 Hour x 6200 Meals)=1240 Hour | $ 8.50 | $ 10,540.00 |
.
6200 | Meals | ||
Quantity (AQ) | Rate (AR) | Actual Cost | |
Direct labor | 1200 | $ 9.00 | $ 10,800.00 |
.
Labor Rate Variance | ||||||
( | Standard Rate | - | Actual Rate | ) | x | Actual Labor Hours |
( | $ 8.50 | - | $ 9.00 | ) | x | 1200 |
-600 | ||||||
Variance | $ 600.00 | Unfavourable-U | ||||
Labour Efficiency Variance | ||||||
( | Standard Hours | - | Actual Hours | ) | x | Standard Rate |
( | 1240 | - | 1200 | ) | x | $ 8.50 |
340 | ||||||
Variance | $ 340.00 | Favourable-F | ||||
Labor Spending Variance | ||||||
( | Standard Cost | - | Actual Cost | ) | ||
( | $ 10,540.00 | - | $ 10,800.00 | ) | ||
-260 | ||||||
Variance | $ 260.00 | Unfavourable-U |
SkyChefs, Inc., prepares in-flight meals for a number of major airlines. One of the company’s products...
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 6,200 of these meals using 1,200 direct labor-hours. The company paid its direct labor workers a total of $10,800 for this work, or $9.00 per hour. According to the standard cost card for this meal, it should require 0.20 direct labor-hours at a...
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