Question

2 5 points Sky Chefs, Inc., prepares in-flight meals for a number of major airlines. One of the company's products is grilled salmon in dm sauce with baby new potatoes and spring vegetables. During the most recent week, the company prepared 7,200 of these meals using 2,800 direct labor-hours. The company paid its direct labor workers a total of $22.400 for this work, or $8.00 per hour. According to the standard cost card for this meal, it should require 0.40 direct labor-hours at a cost of $7.50 per hout Required: 1. What is the standard labor-hours allowed (SH) to prepare 7,200 meals? 2. What is the standard labor cost allowed (SHSR) to prepare 7,200 meals? 3. What is the labor spending variance? 4. What is the labor rate variance and the labor efficiency variance? ebook Hint Print References (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 2 3. Standard labor hours allowed Standard labor cost allowed Labor spending variance Labor rate variance Labor efficiency variance

Answer 1

Answer:

1.	Standard labor-hours allowed	2880
2.	Standarad labor cost allowed	$       21,600
3.	Labor spending​ variance	$            800	U
4.	Labor rate variance	$         1,400	U
	Labor efficiency variance	$            600	F

1. Calculation of Standard labor hours allowed (SH) to make 7,200 meals is as follows:

Standard labor hours allowed (SH) = Actual production * Standard labor hours required per meal

= 7,200 meals * 0.40

= 2,880 labor hours.

2. Calculation of Standarad labor cost allowed to make 7,200 meals is as follows:

Standarad labor cost allowed= SH * SR

= 2,880 * $ 7.50

= $ 21,600

3. Calculation of labor spending​ variance is as follows:

Labor spending​ variance = Standard labor cost - Actual labor cost

= $ 21,600 - $ 22,400

= $ 800 U

Thus, Labor spending​ variance is $ 800 U

4. Calculation of labor rate variance & labor efficiency variance is as follows:

Labor rate variance = ( SR - AR ) * AH

= ( $ 7.50 - $ 8.00 ) * 2,800

= $ 1,400 U

Therefore, labor rate variance $ 1,400 U

Labor efficiency variance = ( SH - AH ) * SR

= ( 2,880 - 2,800 ) * $ 7.50

= $ 600 F

Thus, Labor efficiency variance is $ 600 F

Note:

AH =	Actual labor hours
SH =	Standard labor hours
AR =	Actual labor rate per hour
SR =	Standard labor rate per hour

F = " Favorable Variance" & U = " Unfavorable Variance"