SkyChefs, Inc., prepares in-flight meals for a number of major airlines. One of
ID: 2532094 • Letter: S
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 these 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. Required: 1. According to the standards, what direct labor cost should have been incurred to prepare 5,100 meals? How much does this differ from the actual direct labor cost? (Round labor-hours per meal and labor cost per hour to 2 decimal places.)
Number of Meals Prepared
Standard direct labor hours per meal
total dirct labor hours allowed
standard direct labor cost per hour
total standard direct labor cost
actual cost incurred
total standard direct labor cost
total direct labor variance
Break down the difference computed in (1) above into a labor rate variance and a labor efficiency variance
labor variance rate
labor effeincy variance
Explanation / Answer
Schedule :
2) Break down
Labour rate variance = (13.50*2000-28000) = 1000 Unfavorable
Labour efficiency variance = (2040-2000)*13.5 = 540 Favorable
No of meals prepared 5100 standard hour per meal 0.40 Standard hour allowed for production 2040 Rate per hour 13.50 Standard labour cost 27540 Actual cost 28000 Standard labour cost 27540 Labour variance 460 UnfavorableRelated Questions
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