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 5,100 of these meals using 2,000 direct labor-hours. The company paid its direct labor workers a total of $28,000 for this work, or $14.00 per hour. According to the standard cost card for this meal, it should require 0.40 direct labor-hours at a cost of $13.50 per hour. Requirec 1. What is the standard labor-hours allowed (SH) to prepare 5,100 meals? 2. What is the standard labor cost allowed (SH*SR) to prepare 5,100 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

Number of meals prepared = 5100

Labor hours per meal = 0.40

Total direct labor allowed = 5100 * 0.40 = 2040

Labor cost per hour = 13.50

Total standard labor cost = 2040 *13.50 = 27540

Actual cost = 28000

Total labor cost variance = standard labor cost - Actual cost

= 27540 - 28000 = -460 unfavorable

Actual hours * actual rate per hour = 2000*14 per hour= 28000

Actual hours * standard rate per hour = 2000*13.50 = 27000

Standard hours * standard rate= 2040 * 13.50 = 27540

Total rate variance = Actual hours of input at actual rate - actual rate of input at standard rate

= 28000- 27000= 1000 unfavorable

Labor efficiency variance = standard hours of input at standard rate - actual hours at standard rate

= 27540- 27000= 540 favorable

Spending variance = actual hours of input at actual rate - standard hours = 28000 - 27540 = 460 unfavorable

Standard labor hours = 2040

Standard labor cost =27540

Labor spending variance = 460 unfavorable

Labor rate variance =1000 unfavorable

Labor efficiency variance =540favorable

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