SkyChefs, Inc., prepares in-flight meals for a number of major airlines. One of

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 7,300 of these meals using 1,450 direct labor-hours. The company paid its direct labor workers a total of $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 a cost of $9.50 per hour. Required 1. What is the standard labor-hours allowed (SH) to prepare 7,300 meals? 2. What is the standard labor cost allowed (SH 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? (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. Standard labor-hours allowed 2. Standard labor cost allowed 3. Labor spending variance 4. Labor rate variance Labor efficiency variance

Explanation / Answer

Answer 1.

Standard labor-hours allowed = Direct labor-hours required per unit * Number of units
Standard labor-hours allowed = 0.20 * 7,300
Standard labor-hours allowed = 1,460

Answer 2.

Standard labor cost allowed = Standard labor-hours allowed * Standard direct labor rate
Standard labor cost allowed = 1,460 * $9.50
Standard labor cost allowed = $13,870

Answer 3.

Labor Spending Variance = Actual labor cost - Standard labor cost allowed
Labor Spending Variance = $14,500 - $13,870
Labor Spending Variance = $630 Unfavorable

Answer 4.

Labor Rate Variance = Actual labor cost - Actual direct labor-hours * Standard direct labor rate
Labor Rate Variance = $14,500 - 1,450 * $9.50
Labor Rate Variance = $725 Unfavorable

Labor Efficiency Variance = Actual direct labor-hours * Standard direct labor rate - Standard labor cost allowed
Labor Efficiency Variance = 1,450 * $9.50 - $13,870
Labor Efficiency Variance = $95 Favorable

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.