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 4,800 of these meals using 882 direct labor-hours. The company paid its direct labor workers a total of $10,143 for this work, or $11.50 per hour. According to the standard cost card for this meal, it should require 0.20 direct labor-hours at a cost of $10.50 per hour. Required: 1. What is the standard labor-hours allowed (SH) to prepare 4,800 meals? 2. What is the standard labor cost allowed (SHX 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 "F" for favorable, "U" for unfavorable, and "None" for no effect (.e., zero variance). Input all amounts as positive values. Do not round intermediate calculations.) 1. 2 3 4. Standard labor-hours allowed Standard labor cost allowed Labor spending variance Labor rate variance Labor efficiency variance

Answer 1

Standard Labor hours allowed

4800 meals * .20h / meals

960 Hours

Standard Labor Cost allowed

(SH*SR) toprepare4800 meals

=(.20h*$10.5)*4800

=$10800

Labor Rate Variance:

Actual Hours(Standard Rate- Actual Rate)

882(10.5-11.5)

882 U

Labor spending variance for direct labor is also known as the labor rate variance

Actual Hours(Standard Rate- Actual Rate)

882(10.5-11.5)

882 U

Labor Efficiency Variance:

Actual Hours x Standard Rate - Standard Hours xStandard Rate

In Dollars

(880*11.5)-(960*11.5)

$920 F

In hour

80 Hours F