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 6,500 of these meals using 3,200 direct labor-hours. The company paid these direct labor workers a total of $36,800 for this work, or $11.50 per hour. According to the standard cost card for this meal, it should require 0.50 direct labor-hours at a cost of $11.00 per hour. According to the standards, what direct labor cost should have been incurred to prepare 6,500 meals How much does this differ from the actual direct labor cost

Explanation / Answer

number of meals prepared 6500 standard hours per meal 0.5 total direct hours allowed 3250 standarddirect labor cost per hour 11.00 total standard labor cost 35750.00 actual cost incurred 36800.00 total direct labor variance -1050.00 labour rate variance (actual hour*actual rate)-(actual hour*standard rate) (3200*11.5)-(3200*11) $1600 labor effeciency variance (actual hour*standard rate)-(standard hour*standard rate) (3200*11)-(3250*11) $-550

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