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 3,500 of these meals using 950 direct labor-hours. The company paid its direct labor workers a total of $10,450 for this work, or $11.00 per hour According to the standard cost card for this meal, it should require 0.30 direct labor-hours at a cost of $9.50 per hour Required 1. What is the standard labor-hours allowed (SH) to prepare 3,500 meals? 2. what is the standard labor cost allowed (SH × SR) to prepare 3,500 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.) 2. 3. 4. Standard labor-hours allowed Standard labor cost allowed Labor spending variance Labor rate variance Labor efficiency variance

Explanation / Answer

The following is the required table followed by explanation:

1.Standard labour hours allowed to prepare 3,500 meals

=>3500 meals * direct labour hours required per meal

=>3,500 meal * 0.30 hours per meal

=>1,050 hours

2.Standard labour cost = standard hours * standard labour rate

=>(1,050 hours) * (9.50)

=>$9,975.

3.Labour spending variance:

[actual hours * actual rate] - [ standard hours * standard rate]

=>[950 * $11.00] - [1,050 * $9.50]

=>$10,450 - $9,975

=>$475...(unfavourable)............(since actual cost is greater than standard cost)

4.Labour rate variance.

actual hours *(actual rate - standard rate)

=>950 direct labour hours *(11.00 -9.50)

=>$1,425 (unfavourable).

Efficiency variance

Standard rate (actual hours - standard hours)

=>$9.50*(950 - 1,050)

=>$950 (favourable) ....(since actual hours are less than standard hours we have a favourable variance).

1 Standard labour hours allowed 1,050 2 Standard labour cost $9,975 3 Labour spending variance $475 Unfavorable 4 Labour rate variance $1,425 Unfavourable labour efficiency variance $950 Favourable

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