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 4,300 of these meals using 1,250 direct labor-hours. The company paid these direct labor workers a total of $11,250 for this work, or $9.00 per hour.

     According to the standard cost card for this meal, it should require 0.30 direct labor-hours at a cost of $8.50 per hour.

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 4,300 of these meals using 1,250 direct labor-hours. The company paid these direct labor workers a total of $11,250 for this work, or $9.00 per hour.

Explanation / Answer

1.

2. Labor rate variance = (Standard rate per hr - Actual rate pr hr ) * actual hrs spent

= (8.50 - 9) 1250

= $625 U

Labor efficiency variance = (Standard labor hrs. required - actual labor hrs. spent) * STandard rate per hr

= (1290 - 1250)*8.50

= 340 F

Particulars Amount No. of meals prepared 4300 Standard direct labor Hrs. per meal 0.30 Total labor hrs. allowed 1290 standard labor cost per hr 8.50 Total standard labor cost 10965 actual labor cost incurred 11250 Total standard labor cost 10965 Total direct Labor variance 285 U

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