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 6,300 of these meals using 1,800 labor workers a total of $18,000 for this work, or $10.00 per hour. direct labor-hours. The company paid these direct According to the standard cost card for this meal, it should require 0.30 direct labor-hours at a cost of $9.20 per hour. Required: 1. According to the standards, what direct labor cost should have been incurred to prepare 6,300 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 direct 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 2. Break down the difference computed in (1) above into a labor rate variance and a labor efficiency variance. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) Labor rate variance Labor efficiency variance

Explanation / Answer

1) Schedule :

2) Labour rate variance = (9.20*1800-18000) =1440 Unfavorable

Labour efficiency variance = (1890-1800)*9.2 = 828 Favorable

No of meals prepared 6300 Standard direct labour hour per meal 0.30 Standard direct labour 1890 Rate per hour 9.20 Standard labour cost 17388 Actual cost 18000 Standard cost 17388 Total direct labour variance 612 Unfavorable

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