EXERCISE 10-2 Direct Labor Variances LO10-2 Page 473 SkyChefs, Inc.. prepares in
ID: 2567177 • Letter: E
Question
EXERCISE 10-2 Direct Labor Variances LO10-2 Page 473 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 4.000 of these meals using 960 direct labor-hours. The company paid its direct labor workers a total of $19,200 for this work, or $20.00 per hour According to the standard cost card for this meal, it should require 0.25 direct labor-hours at a cost of $19.75 per hour Required 1. What is the standard labor-hours allowed (SH) to prepare 4,000 meals? 2. What is the standard labor cost allowed (SH x SR) to prepare 4,000 meals? . What is the labor spending variance 4. What is the labor rate variance and the labor efficiency variance?Explanation / Answer
1. Standard labour hours allowed=number of meals×std. Direct labour hours per meal
=4000×.25
=1000 direct labour hours
2.
Standard labour cost allowed=SH×SR
=1000 labour hours ×$19.75 per hour
=$19,750
3.
Spending variance=actual cost incurred- standard direct labour cost
=$19,200-$19,750
=$550 F
4.
Labour rate variance=AH(AR-SR)
=960 hours($20-$19.75)
=$240 U
Labour efficiency variance=SR(AH-SH)
=$19.75×(960-1000)
=$790 F
Related Questions
Hire Me For All Your Tutoring Needs
Integrity-first tutoring: clear explanations, guidance, and feedback.
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.