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 potatoes and spring vegetables. During the most recent week, the company prepared 7300 of these meals using 1450 direct labor-hours. The company paid its direct labor workers a total or $14,500 for this work, or $10.00 per hour.

According to the standard cost card for this meal, it should require 0.20 direct labor-hours at the cost of $9.50 per hour.

1.What is the standard labor-hours allowed (SH) to prepare 7300 meals?

2. What is the standard labor cost allowance? (SH x SR) to seperate 7300 meas?

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. Input all amounts as positive values. Do not round intermediate calculations)

O Ch 10 EOC 28pts 1 Exercise 10-2 (Algo) Direct Labor Variances (LO10-2] SkyChefs, Inc., prepares in-flight meals for a number of major airlines. One of the with baby new potatoes and spring vegetables. During the most recent week, th direct labor-hours. The company paid its direct labor workers a total of $14,500 oped According to the standard cost card for this meal, it should require 0.20 direct la Required: 1 What is the standard labor-hours allowed (SH) to prepare 7300 meals? 2 What is the standard labor cost allowed (SH x SR) to prepare 7,300 meals? 3 What is the labor spending variance? 4 What is the labor rate variance and the labor efficiency variance? ook nt (For requirements 3 and 4, indicate the effect of each veriance by selecting " no effect (i.e., zero variance). Input all amounts as positive values. Do no roum 1 Standard labor-hours allowed nces Standard labor cost allowed 2. 3. Labor spending variance 4. Labor rate variance Labor efficiency variance

Answer 1

1. What is the standard labor-hours allowed (SH) to prepare 7,300 meals? 2. What is the standard labor cost allowed (SH x SR) to prepare 7,300 meals? 3. What is the labor spending variance? 4. What is the labor rate variance and the labor efficiency variance? 1 Standard labor-hours allowed 2 Standard labor cost allowed 3 Labor spending variance 4 Labor rate variance Labor efficiency variance 1,460 $13,870 $630 U $725U $95 F

Explanation: 1. What is the standard labor-hours allowed (SH) to prepare 7,300 meals? Number of meals prepared Standard direct labor-hours per meal Standard labor-hours allowed (SH) 7,300 0.20 1,460 |2. What is the standard labor cost allowed (SH x SR) to prepare 7,300 meals? Standard labor-hours allowed (SH) Standard direct labor cost per hour (SR) Standard labor cost allowed (SH x SR) 1,460 $9.50 $13,870 4. What is the labor rate variance and the labor efficiency variance? Labor rate variance = AH(AR - SR) Labor rate variance ($10.00 - $9.50) x 1,450 hours Labor rate variance $725 unfavorable Labor efficiency variance SR(AH-SH) Labor efficiency variance = (1,450 hours 1,460 hours) x $9.50 per hour Labor efficiency variance = $95 favorable 3. What is the labor spending variance? Labor rate variance Labor efficiency variance Labor spending variance $725 unfavorable 95 favorable $630 unfavorable